Europa Company manufactures only one product. Presented below is direct labor information for November. Standard direct labor hours per unit of product 4.30 Number of finished units produced 5,100 Standard wage rate per direct labor hour (SP) $ 20.30 Total direct labor payroll for the period $ 401,850 Actual wage rate per direct labor hour worked (AP) $ 17.10
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.
Europa Company manufactures only one product. Presented below is direct labor information for November.
| Standard direct labor hours per unit of product | 4.30 | ||
| Number of finished units produced | 5,100 | ||
| Standard wage rate per direct labor hour (SP) | $ | 20.30 | |
| Total direct labor payroll for the period | $ | 401,850 | |
| Actual wage rate per direct labor hour worked (AP) | $ | 17.10 | |
The direct labor flexible-
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$75,200 favorable.
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$43,329 favorable.
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$23,500 unfavorable.
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$107,071 favorable.
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$31,871 unfavorable.
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