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Princess Company uses standard costs (a budget) to control materials costs. The budget calls for 3 pounds of materials for each finished unit produced. The
Princess Company uses standard costs (a budget) to control materials costs. The budget calls for 3 pounds of materials for each finished unit produced. The standard (budgeted) cost per pound of materials is $2.00. During May, 5,000 finished units were manufactured, and 10,000 pounds of materials were used. The price paid for materials was $2.25 per pound. There was no beginning or ending materials inventories.
Required: How much of the difference between budgeted profit and actual profit was related to the quantity of materials used?
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