A firm expected to spend $6 per hour for three hours of direct labor to manufacture one unit of inventory. The firm spent $5 per hour for four hours to make one unit of inventory. The unit direct labor price variance was Select one: a. $4 Favorable. b. $4 Unfavorable. c. $2 Unfavorable. d. $2 Favorable.
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 firm expected to spend $6 per hour for three hours of direct labor to manufacture one unit of inventory. The firm spent $5 per hour for four hours to make one unit of inventory. The unit direct labor price variance was
Select one:
a. $4 Favorable.
b. $4 Unfavorable.
c. $2 Unfavorable.
d. $2 Favorable.
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