Cost Control and Performance Evaluation

Data: ZZZ Pharmaceuticals manufactures a drug with the following cost information:

• Standard cost per unit: $50
• Actual cost per unit: $55
• Budgeted production: 10,000 units
• Actual production: 12,000 units

Requirements:

1. Calculate the materials price variance and materials quantity variance.
2. Determine whether the variances are favorable or unfavorable.
3. Discuss the causes of materials variances at ZZZ Pharmaceuticals.
4. Analyze the impact of materials variances on ZZZ Pharmaceuticals' cost control.
5. Evaluate ZZZ Pharmaceuticals' performance based on cost variance analysis.