Direct labor standard (4.00 hrs. @ $7.00/hr.) $ 28.00 per unit Actual hours worked 12,650 Actual rate per hour $ 7.40 Multiple Choice $5,600 favorable. $4,390 unfavorable. $5,600 unfavorable. $4,390 favorable. $12,650 favorable.
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.
Use the following data to find the total direct labor cost variance if the company produced 3,500 units during the period.
| Direct labor standard (4.00 hrs. @ $7.00/hr.) | $ | 28.00 | per unit | |
| Actual hours worked | 12,650 | |||
| Actual rate per hour | $ | 7.40 |
Multiple Choice
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$5,600 favorable.
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$4,390 unfavorable.
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$5,600 unfavorable.
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$4,390 favorable.
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$12,650 favorable.
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