Direct Materials: (Input) 10 ft. at $6 per foot; (Cost per Output Unit) $60 Direct Manufacturing Labor: (Input) 4 hrs. at $20 per hr.; (Cost per Output Unit) $80 Variable MOH: (Input) 2 MHrs. at $25 per hr.; (Cost per Output Unit) $50 Input price variances are isolated upon purchase. Input efficiency variances are isolated at the time of usage. The records for the period indicate the following: Direct Materials Purchased - 25,000 ft. at $6.10 per ft. Direct Materials Used - 18,900 ft. Direct Manufacturing Labor - 7,600 hrs. at a total of $167,200
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.
The Jethro Company’s costing system has teo direct-cost categories: direct materials and direct manufacturing labor. MOH is allocated based on machins hours (MHrs.) At the beginning of 2023, the Jethro Company budgeted production of 2,000 units for the period and adopted the followung standards for its
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