heese). Each unit produced will require 0.50 direct labor hours at a cost of $10.00 per hour. Variable manufacturing overhead is applied based on direct labor hours at a rate of $5.00 per hour. Last year's sales were expected to total 50,000 units. Jake just received last year's actual results showing sales of 45,000 units. Required: (1) Calculate the standard cost per unit for d
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.
Problem #8: Standard Costing and Variances
Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. The
Required:
(1) Calculate the standard cost per unit for direct materials, direct labor, and variable manufacturing overhead.
(2) Prepare a flexible budget based on actual sales for direct materials, direct labor, and variable manufacturing overhead.
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