Exercise 21-16 (Static) Computing and analyzing direct lapor variances LU P3 Javon Company set standards of 3 hours of direct labor per unit at a rate of $15 per hour. During October, the company actually uses 16,250 hours of direct labor at a $247,000 total cost to produce 5,600 units. In November, the company uses 22,000 hours of direct labor at a $335,500 total cost to produce 6,000 units of product. AH = Actual Hours SH= Standard Hours AR= Actual Rate SR Standard Rate (1) Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor variance for each of these two months. (2) Javon investigates variances of more than 5% of actual direct labor cost. Which direct labor variances will the company investigate further? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor variance for each of these two months. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.)

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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.