Question

Variance means

	a.	difference between standard or applied amount and actual amount
	b.	actual costs less actual rates
	c.	standard costs less standard rates
	d.	square root of standard deviation

2.

Table Manufacturing Company produces one style of tables.
The following data pertain to producing one table
Planned production/month
units (one table)	90
Piece of woods (M)	20
Estimated M price	$40
Actual production
Quantity purchased (QP)	22
Find actual price (AP)	x
Assuming that the manager wants the
total material variance	0

		Less than $30
		Between $30 and $33
		Between $34 and $35
		More than $36

Answer 1

1. Option (a) is correct

Variance means difference between standard or applied amount and actual amount.

2. Option (d) is correct

Formula for material variance is:

Material variance = (Standard price * Standard quantity) - (Actual price * Actual quantity)

Putting the values in the above formula, we get,

0 = ($40 * 20) - (Actual price * 22)

0 = $800 - Actual price * 22

Actual price = $800 /22

Actual price = $36.36