At Laramie, the standard quantity of labor is 26 hours per refrigeration unit. The standard wage rate is $34. In July, the company produced 79 refrigeration units and incurred 2,020 labor hours at a cost of $60,600. Calculate the labor rate variance and the labor efficiency variance. Indicate whether the variances are favorable or unfavorable. (Round intermediate calculations to 2 decimal places, e.g. 14.37 and final answers to 0 decimal places, e.g. 125. Enter all variances as a positive number.) Labor Rate Variance $enter labour rate variance in dollar amount favorable, unfavorable, or neither (same questions for labor efficiency variance) Labor Efficiency Variance $enter labour efficiency in dollar amount
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.
At Laramie, the standard quantity of labor is 26 hours per refrigeration unit. The standard wage rate is $34. In July, the company produced 79 refrigeration units and incurred 2,020 labor hours at a cost of $60,600.
Calculate the labor rate variance and the labor efficiency variance. Indicate whether the variances are favorable or unfavorable. (Round intermediate calculations to 2 decimal places, e.g. 14.37 and final answers to 0 decimal places, e.g. 125. Enter all variances as a positive number.)
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Labor Rate Variance
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$enter labour rate variance in dollar amount | favorable, unfavorable, or neither (same questions for labor efficiency variance) | |||
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Labor Efficiency Variance
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$enter labour efficiency in dollar amount |
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