The standard cost of Product DD is 4 hours of labor at a rate of $12.00 per hour. During the month 40,600 hours of labor are incurred at a cost of $12.15 per hour. The company produced 10,000 units of product DD. A. Calculate the Direct Labor rate variance B. Calculate the Direct Labor usage variance C. Calculate the Total Direct labor cost variance
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
40,600 hours of labor are incurred at a cost of $12.15 per hour. The company produced 10,000 units
of product DD.
A. Calculate the Direct Labor rate variance
B. Calculate the Direct Labor usage variance
C. Calculate the Total Direct labor cost variance
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