Sanchez Company established a direct materials standard of 4 pounds at $4.50 per pound for one of its products.During March,Sanchez purchased 15,000 pounds at $4.42 per pound.
Required:
Based on this information,
(a)Which variance can you calculate?
(b)What is the dollar amount of the variance?
(c)Is the variance favorable or unfavorable?
(d)Do you consider the variance to be sufficiently material that managers should investigate to discover the cause of the variance?

Question

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The Answer of Sanchez Company established a direct materials standard of 4 pounds at $4.50 per pound for one of its products.During March,Sanchez purchased 15,000 pounds at $4.42 per pound.
Required:
Based on this information,
(a)Which variance can you calculate?
(b)What is the dollar amount of the variance?
(c)Is the variance favorable or unfavorable?
(d)Do you consider the variance to be sufficiently material that managers should investigate to discover the cause of the variance?

Sanchez Company Established a Direct Materials Standard of 4 Pounds