During the year, Dorner Company produced 280,000 lathe components for industrial metal working machinery. Dornaer's direct materials and direct labor standards per units are as follows: Direct materials (8.45 lbs. @ 6.00) $50.70 Direct labor ( 1.80 hr. @ $15) 27.00 required: 1. compute the standard pounds of direct materials allowed for the production of 280,000 units. 2. compute the standard pounds of direct labor allowed for the production of 280,000 units.
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.
During the year, Dorner Company produced 280,000 lathe components for industrial metal working machinery. Dornaer's direct materials and direct labor standards per units are as follows:
Direct materials (8.45 lbs. @ 6.00) $50.70
Direct labor ( 1.80 hr. @ $15) 27.00
required:
1. compute the standard pounds of direct materials allowed for the production of 280,000 units.
2. compute the standard pounds of direct labor allowed for the production of 280,000 units.
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