A manufactured product has the following information for June. Standard Quantity and Cost Actual Results Direct materials 6 pounds @ $8 per pound 48,500 pounds @ $8.10 per pound Direct labor 2 DLH @ $16 per DLH 15,700 hours @ $16.50 per hour Overhead 2 DLH @ $12 per DLH $ 198,000 Units manufactured 8,000 units Compute the (1) direct materials price variance and (2) direct materials quantity variance. Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Roun
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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