COMM 1102 Lecture 10: COMM 1102 CHAPTER 10
15 Oct 2018
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Variances - the differences between your standards and your actual. Standards are norms for measuring performance or what you regularly expect. Company will establish a standard - ex. how much material should go into each unit, and what is the price we would expect to pay. Then they make a certain quantity of products and get actual results, and then compare. Standard price per unit and standard quantity per unit. It"s a benchmark - how are the managers doing when buying the materials, and how good are they at using the materials. Should have used 200 kg - but actually used 210 - too much. Should have cost ,050 - but actually payed ,029 - good because cost less. Should have used 200 kg (0. 1 x 2,000) Standard price x actual quantity = . 00 x 210 = ,050. Standard quantity = 1,500 (1,000 x 1. 5 pounds/unit) Price variance = f (,630 6,800) Quantity variance = u (,000 ,800)
