Actual Standard Costs Costs Direct |118,500 lb. 120,000 lb. at $3.20 materials at $3.25 Direct 11,700 hrs. 12,000 hrs. at $24.40 labor at $25.00 Factory Rates per direct labor hr based on 100% of overhead normal capacity of 15,000 direct labor hrs. $91,200 Variable cost, $8.00 variable cost $150,000 Fixed cost, $10.00 fixed cost
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.
Direct materials, direct labor, and
Each unit requires 0.3 hour of direct labor.
Instructions
Determine (a) the direct materials price variance, direct materials
quantity variance, and total direct materials cost variance; (b) the direct
labor rate variance, direct labor time variance, and total direct labor cost
variance; and (c) the variable factory overhead controllable variance,
fixed factory' overhead volume variance, and total factory overhead cost
variance.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
