Ally Mfg. uses a standard cost system and its July production of 3,300 units involved actual direct labor costs of $395,300 for 6,700 hours worked . The budget for July called for production of 3,500 units with 7,000 direct labor hours at $55.00 per hour. Ally's direct labor rate variance for July, to the nearest dollar, was: rev: 11_08_2018_QC_CS-147544 Multiple Choice $5,500 unfavorable. $26,800 unfavorable. $23,300 favorable. $32,300
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.
Ally Mfg. uses a
Ally's direct labor rate variance for July, to the nearest dollar, was:
rev: 11_08_2018_QC_CS-147544
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$5,500 unfavorable.
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$26,800 unfavorable.
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$23,300 favorable.
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$32,300 unfavorable.
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$3,500 unfavorable.
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