a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places. Direct materials standard cost per unit $ Direct labor standard cost per unit Total standard cost per unit $ b. Determine the price variance, quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct materials price variance $ Direct materials quantity variance Total direct materials cost variance $ c. Determine the rate variance, time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct labor rate variance $ Direct labor time variance Total direct labor cost variance $
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Direct Materials and Direct Labor
Variance Analysis Lenni Clothing Co. manufactures clothing in a small manufacturing facility. Manufacturing has 25 employees. Each employee presently provides 40 hours of productive labor per week. Information about a production week is as follows:
Standard wage per hr. $12.00 Standard labor time per unit 12 min. Standard number of yds. of fabric per unit 5.0 yds. Standard price per yd. of fabric $5.00 Actual price per yd. of fabric $5.10 Actual yds. of fabric used during the week 26,200 yds. Number of units produced during the week 5,220 Actual wage per hr. $11.80 Actual hrs. for the week 1,000 hrs. Required:
a. Determine the
standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.Direct materials standard cost per unit $ Direct labor standard cost per unit Total standard cost per unit $ b. Determine the price variance, quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Direct materials price variance $ Direct materials quantity variance Total direct materials cost variance $ c. Determine the rate variance, time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Direct labor rate variance $ Direct labor time variance Total direct labor cost variance $
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