The following information summarizes the standard cost for producing one metal tennis racket frame at Spaulding Industries. In addition, the variances for one month's production are given. Assume that all inventory accounts have zero balances at the beginning of the month. Standard Cost Per Unit Standard Monthly Costs Materials $ 9.00 $ 18,000 Direct Labor 2 hrs. @ $3.00 4.00 8,000 Factory Overhead: Variable 2.00 3,840 Fixed 5.00 13,200 $ 20.00 $ 40.000 Variances: Material price 238.00 unfavorable Material quantity 900.00 unfavorable Labor rate 700.00 favorable Labor efficiency 2,950.00 unfavorable What were the actual direct labor hours worked during the month? 9.43 9.11 9.57 9.00
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 summarizes the
| Standard Cost Per Unit | Standard Monthly Costs | ||||||
| Materials | $ | 9.00 | $ | 18,000 | |||
| Direct Labor 2 hrs. @ $3.00 | 4.00 | 8,000 | |||||
| Factory Overhead: | |||||||
| Variable | 2.00 | 3,840 | |||||
| Fixed | 5.00 | 13,200 | |||||
| $ | 20.00 | $ | 40.000 | ||||
| Variances: | |||
| Material price | 238.00 | unfavorable | |
| Material quantity | 900.00 | unfavorable | |
| Labor rate | 700.00 | favorable | |
| Labor efficiency | 2,950.00 | unfavorable | |
What were the actual direct labor hours worked during the month?
9.43
9.11
9.57
9.00
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