Betty’s Bakery has the following standard cost sheet for one unit of its most popular cake: SQ SP Direct materials 1.2 pounds $1.50 per pound Direct labor 0.8 hours $12.00 per hour During the month of May, the company made 620 cakes and incurred the following actual costs: Direct materials purchased and used (920 pounds), $1,196 Direct labor (680 hours), $7,820 Calculate the direct materials price variance. Calculate the direct materials quantity variance. Calculate the direct materials spending variance. Calculate the direct labor rate variance. Calculate the direct labor efficiency 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.
Betty’s Bakery has the following
| SQ | SP | |||
|---|---|---|---|---|
| Direct materials | 1.2 pounds | $1.50 per pound | ||
| Direct labor | 0.8 hours | $12.00 per hour |
During the month of May, the company made 620 cakes and incurred the following actual costs:
Direct materials purchased and used (920 pounds), $1,196
Direct labor (680 hours), $7,820
- Calculate the direct materials price variance.
- Calculate the direct materials quantity variance.
- Calculate the direct materials spending variance.
- Calculate the direct labor rate variance.
- Calculate the direct labor efficiency variance.
- Calculate the direct labor spending variance.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
