Bless Inc. manufactures a single product in which variable manufacturing overhead is assigned on the basis of direct labor hours. The company uses a standard cost system and has established the following standards for one unit of product: Standard Qnty and Standard Price/Rate respectively are: Direct Materials - 1.5 pounds and P3.00/pound; Direct Labor - 0.6 hours and P6/hr; Variable FOH - 0.60 hours and P1.25/hr. During March, the following activity was recorded by the company: a. The company produced 3,000 units during the month; b. A total of 8,000 pounds of material were purchased at a cost of P23,000. c. There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,000 pounds of material remained in the warehouse. d. During March, 1600 direct labor hours were worked at a rate of P6.50 per hour. e. Variable manufacturing overhead costs during March totaled P1,800. REQUIRED: 1. What is the material price variance for March? 2. the material quantity variance for March is? 3. the labor rate variance for March would be:
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.
Bless Inc. manufactures a single product in which variable manufacturing
REQUIRED:
1. What is the material price variance for March?
2. the material quantity variance for March is?
3. the labor rate variance for March would be:
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