Ahlia Company developed standard costs for direct material and direct labor. In 2021, Ahlia estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted quantity Budgeted price $31 per pound $16 per hour During June, Ahlia produced and sold 5,000 containers using 490 pounds of direct materials at an average cost per pound of $30 and 250 direct manufacturing labor- hours at an average wage of $15.25 per hour. Instructions: Direct materials 0.10 pounds Direct labor 0.05 hours 1. Compute the direct materials price variance. 2. Compute the direct manufacturing labor efficiency variance.
Ahlia Company developed standard costs for direct material and direct labor. In 2021, Ahlia estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted quantity Budgeted price $31 per pound $16 per hour During June, Ahlia produced and sold 5,000 containers using 490 pounds of direct materials at an average cost per pound of $30 and 250 direct manufacturing labor- hours at an average wage of $15.25 per hour. Instructions: Direct materials 0.10 pounds Direct labor 0.05 hours 1. Compute the direct materials price variance. 2. Compute the direct manufacturing labor efficiency variance.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter9: Standard Costing: A Functional-based Control Approach
Section: Chapter Questions
Problem 20E: Jameson Company produces paper towels. The company has established the following direct materials...
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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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