Georgia Company uses standard costs and a flexible budget for controlling its service activities. In September, the company serviced 6,000 units of its product using 17,000 actual direct labor hours. Three (3) direct labor hours is the standard allowance for servicing one unit of product. The actual hourly rate was $13.50. The standard labor rate is $13 per hour.
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.
Georgia Company uses
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