11) What is the Direct Labor Efficiency Variance?Question 1212) The Direct Labor Efficiency Variance is Favorable.TrueFalseQuestion 1313) What is the Direct Labor Rate Variance? At the beginning of the year, you estimated the following -Production - 75,000 unitsRaw Material - 270,000 pounds at a cost of $1,026,000Direct Labor - 187,500 hours at a cost of $4,125,000Variable Overhead - 135,000 machine hours at a cost of $567,000Fixed Overhead - $900,000At the end of year, the actual results were as follows -Production - 73,000 unitsRaw Material - 265,720 pounds purchased and used at a cost of $1,036,308Direct Labor - 179,580 hours at a cost of $3,968,718Variable Overhead - 133,590 machine hours at a cost of $558,406.20Fixed Overhead - $891,000

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Variance refers to the difference between actual results and the budget or standard.

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11) What is the Direct Labor Efficiency Variance? Question 12 12) The Direct Labor Efficiency Variance is Favorable. True False Question 13 13) What is the Direct Labor Rate Variance?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

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.

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Question

At the beginning of the year, you estimated the following -
Production - 75,000 units
Raw Material - 270,000 pounds at a cost of $1,026,000
Direct Labor - 187,500 hours at a cost of $4,125,000
Variable Overhead - 135,000 machine hours at a cost of $567,000
Fixed Overhead - $900,000
At the end of year, the actual results were as follows -
Production - 73,000 units
Raw Material - 265,720 pounds purchased and used at a cost of $1,036,308
Direct Labor - 179,580 hours at a cost of $3,968,718
Variable Overhead - 133,590 machine hours at a cost of $558,406.20
Fixed Overhead - $891,000

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At the beginning of the year, you estimated the following - Production - 75,000 units Raw Material - 270,000 pounds at a cost of $1,026,000 Direct Labor - 187,500 hours at a cost of $4,125,000 Variable Overhead - 135,000 machine hours at a cost of $567,000 Fixed Overhead - $900,000 At the end of year, the actual results were as follows - Production - 73,000 units Raw Material - 265,720 pounds purchased and used at a cost of $1,036,308 Direct Labor - 179,580 hours at a cost of $3,968,718 Variable Overhead - 133,590 machine hours at a cost of $558,406.20 Fixed Overhead - $891,000