The following information describes a company’s direct labor usage in a recent period. Compute the direct labor rate and efficiency variances for the period and classify each as favorable or unfavorable. Actual direct labor hours used. 65,000 Standard direct labor rate per hour. $14 Actual direct labor rate per hour. $15 Standard direct labor hours for units produced. 67,000
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 following information describes a company’s direct labor usage in a recent period. Compute the direct
labor rate and efficiency variances for the period and classify each as favorable or unfavorable. Actual direct labor hours used. 65,000 Standard direct labor rate per hour. $14
Actual direct labor rate per hour. $15 Standard direct labor hours for units produced. 67,000
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