Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 43

Direct Materials Variances—Journal Entries Steinberg Company had the following direct materials costs for the manufacturing of product T in March:

Actual purchase price per pound	$7.50
Standard direct materials allowed for units of Product T produced	2,100	pounds
Decrease in direct materials inventory	100	pounds
Direct materials used in production	2,300	pounds
Standard price per pound of material	$7.25

Required

1. What was Steinberg’s direct materials purchase-price variance and its direct materials usage variance for March?

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2. Give the appropriate journal entries for March.

Step 1 of 6

Variance and budget v/s variance:

In costing, variance is a difference occurred between planned, standard or budgeted cost and the actual cost incurred. These variances can be for both cost and revenue. These variances can be favourable or unfavourable.