A manufacturer reports the following standard cost card. For June, the company made 1,200 units and incurred actual total manufacturing costs of $135,850. Compute the standard cost per unit and the total cost variance. Label the variance as favorable (F) or unfavorable (U). Production Factor Standard Direct materials 2 lbs. per unit @ $25 per lb. Direct labor . 1.5 hours per unit @ $18 per hour Overhead . $24 per direct labor hour
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 manufacturer reports the following
actual total
variance. Label the variance as favorable (F) or unfavorable (U). Production Factor Standard
Direct materials 2 lbs. per unit @ $25 per lb.
Direct labor . 1.5 hours per unit @ $18 per hour
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