Misterio Company uses a standard costing system. During the past quarter, the following variances were computed: Variable overhead efficiency variance $ 24,000 U Direct labor efficiency variance 120,000 U Direct labor rate variance 10,400 U Misterio applies variable overhead using a standard rate of $2 per direct labor hour allowed. Two direct labor hours are allowed per unit produced. (Only one type of product is manufactured.) During the quarter, Misterio used 30 percent more direct labor hours than should have been used. What is the standard hourly rate for direct labor?
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.
Misterio Company uses a
| Variable overhead efficiency variance | $ 24,000 U |
| Direct labor efficiency variance | 120,000 U |
| Direct labor rate variance | 10,400 U |
Misterio applies variable overhead using a standard rate of $2 per direct labor hour allowed. Two direct labor hours are allowed per unit produced. (Only one type of product is manufactured.) During the quarter, Misterio used 30 percent more direct labor hours than should have been used.
What is the standard hourly rate for direct labor?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
