Calculate labor rate and efficiency variances and the controllable overhead variance and the overhead volume variance. (F
Calculate labor rate and efficiency variances and the controllable overhead variance and the overhead volume variance. (F
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter10: Standard Costing And Variance Analysis
Section: Chapter Questions
Problem 72P: Moleno Company produces a single product and uses a standard cost system. The normal production...
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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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Transcribed Image Text:At the start of 2021, Ceradyne Express Company determined its standard labor cost to be 2.10 hours per unit at $12.00 per hour. The
budget for variable overhead was $8 per unit, and budgeted fixed overhead was $15,000 for the year. Expected annual production was
6,000 units. During 2021, the actual cost of labor was $15.39 per hour. Ceradyne Express produced 4,800 units requiring 12,600
direct labor hours. Actual overhead for the year was $49,650.
Calculate labor rate and efficiency variances and the controllable overhead variance and the overhead volume variance. (Round
intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to O decimal places, e.g. 125. Enter all variances as a positive
number.)
Labor Rate Variance
$
Labor Efficiency Variance
Controllable Overhead Variance
$
Overhead Volume Variance
$
%24
%24
%24
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