Fletcher Company collected the following data regarding production of one of its products. Compute the total direct labor variance. Direct labor standard (2 hours @ $13.00/hour) $ 26.00 per finished unit Actual direct labor hours 90,000 hours Actual finished units produced 44,250 units Actual cost of direct labor $ 1,215,000
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.
Fletcher Company collected the following data regarding production of one of its products. Compute the total direct labor variance.
| Direct labor standard (2 hours @ $13.00/hour) | $ 26.00 | per finished unit |
|---|---|---|
| Actual direct labor hours | 90,000 | hours |
| Actual finished units produced | 44,250 | units |
| Actual cost of direct labor | $ 1,215,000 |
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