Calculate a full analysis of the direct materials price, efficiency, and flexible budget variances. b. Calculate a full analysis of the direct labor price, efficiency, and flexible budget variances. c. Comment on possible causes of the direct labor price and efficiency variances. Focus on causes of the variance NOT repeating financial results from your analysis above.
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.
15. Portland Inc. (PI) has developed
| Standard Quantity | Standard Price | |
| Direct Materials | 0.25 pounds per unit | $25 per pound |
| Direct Labor | 0.70 hours per unit | $15 per hour |
| Units | 30,000 |
PI's actual results for the year were production and sales of 33,500 units using 8,100 pounds of direct materials for a total material cost of $216,675 and direct
a. Calculate a full analysis of the direct materials price, efficiency, and flexible
b. Calculate a full analysis of the direct labor price, efficiency, and flexible budget variances.
c. Comment on possible causes of the direct labor price and efficiency variances. Focus on causes of the variance NOT repeating financial results from your analysis above.
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