Brookman, Inc. manufactures lead crystal glasses. The standard direct labor time is 0.5 hour per glass, at a cost of $11 per hour. The actual results for one month's production of 6,800 glasses were 0.4 hours per glass, at a cost of $10 per hour. Calculate the direct labor cost variance and the direct labor efficiency variance. Select the formula, then
Brookman, Inc. manufactures lead crystal glasses. The standard direct labor time is 0.5 hour per glass, at a cost of $11 per hour. The actual results for one month's production of 6,800 glasses were 0.4 hours per glass, at a cost of $10 per hour. Calculate the direct labor cost variance and the direct labor efficiency variance. Select the formula, then
Chapter1: Financial Statements And Business Decisions
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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.
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Question
Brookman, Inc.
manufactures lead crystal glasses. The standard direct labor time is
0.5
hour per glass, at a cost of
$11
per hour. The actual results for one month's production of
6,800
glasses were
0.4
hours per glass, at a cost of
$10
per hour. Calculate the direct labor cost variance and the direct labor efficiency variance.Select the formula, then enter the amounts and compute the cost variance for direct labor and identify whether the variance is favorable (F) or unfavorable (U).
|
(
|
Actual Cost
|
-
|
Standard Cost
|
)
|
×
|
Actual Quantity
|
=
|
Direct Labor Cost Variance
|
|
(
|
$10
|
-
|
$11
|
)
|
×
|
2,720
|
=
|
$2,720
|
F
|
Select the formula, then enter the amounts and compute the efficiency variance for direct labor and identify whether the variance is favorable (F) or unfavorable (U).
|
(
|
Actual Quantity
|
-
|
Standard Quantity
|
)
|
×
|
Standard Cost
|
=
|
Direct Labor Efficiency Variance
|
|
(
|
|
-
|
|
)
|
×
|
|
=
|
|
(1)
|
(1)
F
U
|
YOU ANSWERED:
|
|
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