In 2020 standard cost variance analysis report presented by the controller of ABC Corporation, the labor cost variance shows that efficiency has resulted to favorable variance, while rate shows unfavorable variance. Which of the following could have been the reason for the said outcome? a. The workers assigned by the human resources management were unskilled and relatively low paid b. The workers assigned in the production department were experienced and skilled individuals and relatively high paid c.Low quality materials were used and caused more labor hours to be produced d.The workers were pushed to over time due to inefficiency in making the product.
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.
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