Blue Dingo uses a standard costing system. The company's standard costs and variances for direct materials, direct labor, and factory overhead for the month of May are as follows. Variances Standard Cost Unfavorable Favorable Direct materials $ 84,000 Price variance $ 4,700 Quantity variance $ 3,000 Direct labor 174,000 Rate variance 2,700 Efficiency variance 6,200 Manufacturing overhead 256,000 Spending variance 3,800 Volume variance 5,000 Determine the actual costs incurred during the month of May for direct materials, direct labor, and manufacturing overhead
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.
Blue Dingo uses a
| Variances | |||||||||||
| Standard Cost | Unfavorable | Favorable | |||||||||
| Direct materials | $ | 84,000 | |||||||||
| Price variance | $ | 4,700 | |||||||||
| Quantity variance | $ | 3,000 | |||||||||
| Direct labor | 174,000 | ||||||||||
| Rate variance | 2,700 | ||||||||||
| Efficiency variance | 6,200 | ||||||||||
| Manufacturing overhead | 256,000 | ||||||||||
| Spending variance | 3,800 | ||||||||||
| Volume variance |
5,000 |
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Determine the actual costs incurred during the month of May for direct materials, direct labor, and manufacturing overhead.
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