$46,830 $189,515 $16,487 Direct materials $16,843 $13,541 $19,846 Direct labor $185,961 $64,891 $168,543 Applied manufacturing overhead $89,652 $78,943 $98,462 Ending balance $339,286 $346,890 $303
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.
Rohan Outfitters manufacturers durable work clothes and boots. During the month of June they worked on the following three jobs:
| Job A | Job B | Job C | |
| Beginning balance | $46,830 | $189,515 | $16,487 |
| Direct materials | $16,843 | $13,541 | $19,846 |
| Direct labor | $185,961 | $64,891 | $168,543 |
| Applied manufacturing |
$89,652 | $78,943 | $98,462 |
| Ending balance | $339,286 | $346,890 | $303,338 |
The status of each Job at the end of the month is, as follows: Job A remained in process, Job B was completed but unsold, Job C was sold. The manufacturing overhead reported for each job was applied using an ABC allocation method. The actual
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