Direct Materials and Direct Labor Variances Berner Company produces a dark chocolate candy bar. Recently, the company adopted the following standards for one bar of the candy: Direct materials (8.30 oz. $0.09) Direct labor (0.09 hr. @ $18.00) Standard prime cost During the first week of operation, the company experienced the following actual results: a. Bars produced: 142,000. b. Ounces of direct materials purchased: 1,178,900 ounces at $0.08 per ounce. c. There are no beginning or ending inventories of direct materials. d. Direct labor: 12,640 hours at $17.30. Required: $0.75 1.62 Instructions for parts 1 and 2: If a variance is zero, enter "0" and select "Not applicable" from the drop down box. Labor Rate Variance $2.37 1. Compute price and usage variances for direct materials. Materials Price Variance Materials Usage Variance 2. Compute the rate variance and the efficiency variance for direct labor. Labor Efficiency Variance Record purchase of materials 3. Prepare the journal entries associated with direct materials and direct labor. If an amount box does not require an entry, leave it blank. Record usage of materials

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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.