A company uses four hours of direct labor to produce a product unit. The standard direct labor cost is $20 per hour. This period the company produced 20,000 units and used 84,160 hours of direct labor at a total cost of $1,599,040. What is its labor rate variance for the period? a. $83,200 F c. $84,160 F e. $960 F b. $84,160 U d. $83,200 U
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.
A company uses four hours of direct labor to produce a
product unit. The standard direct labor cost is $20 per hour.
This period the company produced 20,000 units and used
84,160 hours of direct labor at a total cost of $1,599,040.
What is its labor rate variance for the period?
a. $83,200 F c. $84,160 F e. $960 F
b. $84,160 U d. $83,200 U
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
