Question

2. Materials Variance Analysis (30 points) Midend's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. Material A Material B Material C Flexible Budget $15,000 37,000 21,000 Variances Price Efficiency $500F $1,800U 1,600U 900U 1,300U 1,900F a. Calculate the actual amount spent for Material A, B and C. b. Generate three potential explanations for the variances identified for each Material.

Answer 1

Dear Student
Thank you for using homeworklib
Please find below the answer
Statement showing Computations
Particulars	Flexible Budget	Price Variance	Efficiency Variance	Actual Amount Spent
Material A	15,000.00	500.00	(1,800.00)	13,700.00
Material B	37,000.00	(1,600.00)	(900.00)	34,500.00
Material C	21,000.00	(1,300.00)	1,900.00	21,600.00
b)
Material A
Fav Price variance means less price paid as compared to budgeted.
Fav Price variance also indicated good negotiation skills
Unfav efficiency variance means more quantity used than budgeted
Material B
UnFav Price variance means more price paid as compared to budgeted.
UnFav Price variance also indicated bad negotiation skills
Unfav efficiency variance means more quantity used than budgeted
Material C
UnFav Price variance means more price paid as compared to budgeted.
UnFav Price variance also indicated bad negotiation skills
fav efficiency variance means Less quantity used than budgeted