Direct Materials and Direct Labor Variance Analysis Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 30 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: Standard wage per hour $15.00 Standard labor time per unit 15 min. Standard number of lbs. of brass 1.6 lbs. Standard price per lb. of brass $9.75 Actual price per lb. of brass $10.00 Actual lbs. of brass used during the week 14,338 lbs. Number of units produced during the week 8,700 Actual wage per hour $15.45 Actual hours for the week (30 employees × 36 hours) 1,080 Direct Labor Time Variance $ Total Direct Labor Cost Variance $
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.
Direct Materials and Direct Labor
Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 30 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:
| Standard wage per hour | $15.00 |
| Standard labor time per unit | 15 min. |
| Standard number of lbs. of brass | 1.6 lbs. |
| Standard price per lb. of brass | $9.75 |
| Actual price per lb. of brass | $10.00 |
| Actual lbs. of brass used during the week | 14,338 lbs. |
| Number of units produced during the week | 8,700 |
| Actual wage per hour | $15.45 |
| Actual hours for the week (30 employees × 36 hours) | 1,080 |
| Direct Labor Time Variance | $ |
|
| Total Direct Labor Cost Variance | $ |
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