For the month of August, M Company’s records disclosed the following data relating to direct labor: Actual direct labor cost P10,000 Rate variance 1,000 F Efficiency variance 1,500 U Standard direct labor cost P9,500 For the month of August, M used 2,000 direct labor hours. The company’s standard direct labor rate per hour is: Group of answer choices P5.50 P4.75 P4.50 P5.00
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.
For the month of August, M Company’s records disclosed the following data relating to direct labor:
|
Actual direct labor cost |
P10,000 |
|
Rate variance |
1,000 F |
|
Efficiency variance |
1,500 U |
|
Standard direct labor cost |
P9,500 |
For the month of August, M used 2,000 direct labor hours. The company’s standard direct labor rate per hour is:
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