Three hours are required to produce one unit of product. The company budgeted a $14 per hour wage rate for 21,000 budgeted hours, but actually paid workers $17 per hour for 25,000 hours actually worked during the year. The labor rate variance is: $
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.
Three hours are required to produce one unit of product. The company budgeted a $14 per hour wage rate for 21,000 budgeted hours, but actually paid workers $17 per hour for 25,000 hours actually worked during the year. The labor rate variance is: $
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