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a product has a budgeted direct material cost of 5$ per unit.In a period,production of the product was
budget 9000 units
44380 was incurred on direct materials for period’s production
the total cost variance due to price and usage factors?
shouldn’t it be 1380$
Variable cost variances are calculated by comparing actual costs to flexed budget costs. Ie, for the output achieved what should the cost have been? The original budgeted output is not relevant.
8800 units should cost 8800 x 5 = 44,000
They did cost 44380.
Varaince = 380 Adverse