Calculate the following variances for November 2021 and indicate whether each of it is favorable (F) or adverse (A). 1. Direct material price. 2. Direct material usage 3. Direct labour rate 4. Direct labour efficiency.
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.
Calculate the following variances for November 2021 and indicate whether each of it
is favorable (F) or adverse (A).
1. Direct material price.
2. Direct material usage
3. Direct labour rate
4. Direct labour efficiency.
Please provide a calculation for each of them.
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