direct labor cost budget for March.
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.
MatchPoint Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for March for the two rackets is as follows:
| Junior | Pro Striker | |
| Production budget | 6,000 units | 18,500 units |
Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:
| Forming Department | Assembly Department | |
| Junior | 0.2 hour per unit | 0.5 hour per unit |
| Pro Striker | 0.3 hour per unit | 0.65 hour per unit |
The direct labor rate for each department is as follows:
| Forming Department | $16 per hour |
| Assembly Department | $12 per hour |
Prepare the direct labor cost budget for March.
| MatchPoint Racket Company | ||
| Direct Labor Cost Budget | ||
| For the Month Ending March 31 | ||
| Forming Department |
Assembly Department |
|
| Hours required for production: | ||
| Junior | fill in the blank 1 | fill in the blank 2 |
| Pro Striker | fill in the blank 3 | fill in the blank 4 |
| Total hours required | fill in the blank 5 | fill in the blank 6 |
| Hourly rate | x$fill in the blank 7 | x$fill in the blank 8 |
| Total direct labor cost | $fill in the blank 9 | $fill in the blank 10 |
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