ABC Company manufactures a single product with the following standard labour costs for one unit: Direct labour: 0.5 hour at $6.50 $3.25 During the month of April 5000 units were produced with the follow cost data relating to the month Direct labour: 3000 hours at $6.25 an hour $18750 1. Find the labour price and quantity variances for the month 2. Prepare journal entries
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.
ABC Company manufactures a single product with the following
Direct labour: 0.5 hour at $6.50
$3.25
During the month of April 5000 units were produced with the follow cost data relating to the month
Direct labour: 3000 hours at $6.25 an hour
$18750
1. Find the labour price and quantity variances for the month
2. Prepare
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