The Flapjack Corporation had 7,728 actual direct labor hours at an actual rate of $12.30 per hour. Original production had been budgeted for 1,100 units, but only 960 units were actually produced. Labor standards were 7.6 hours per completed unit at a standard rate of $13.02 per hour. The labor rate variance is $5,564.16 unfavorable $5,564.16 favorable $5,849.63 unfavorable $5,849.63 favorable
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.
The Flapjack Corporation had 7,728 actual direct labor hours at an actual rate of $12.30 per hour. Original production had been budgeted for 1,100 units, but only 960 units were actually produced. Labor standards were 7.6 hours per completed unit at a standard rate of $13.02 per hour.
The labor rate variance is
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