Bateh Company produces hot sauce. The following information is provided concerning its standard cost system for the year: Standard Data Actual Data Material 1/8 lbs. @ $7.50 per lb. Produced 4,400 Labor 24 mins. @ $12 per hr. Materials cost $7.40 per pound Budgeted fixed overhead $28,350 Materials used 556 pounds Budgeted variable overhead $4.50 per unit Labor worked 1,610 hrs. totaling $19,481 Budgeted production 4,500 Actual overhead Fixed $20,000; Variable: $28,400 How much is the labor quantity variance?
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.
Bateh Company produces hot sauce. The following information is provided concerning its
|
Standard Data |
|
Actual Data |
|
|
Material |
1/8 lbs. @ $7.50 per lb. |
Produced |
4,400
|
|
Labor |
24 mins. @ $12 per hr. |
Materials cost |
$7.40 per pound |
|
Budgeted fixed |
$28,350 |
Materials used |
556 pounds |
|
Budgeted variable overhead |
$4.50 per unit |
Labor worked |
1,610 hrs. totaling $19,481 |
|
Budgeted production |
4,500 |
Actual overhead |
Fixed $20,000; Variable: $28,400 |
How much is the labor quantity variance?
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