Information for Bonanza Company's direct labor cost for February is as follows: Actual direct labor hours 89,000 Total direct labor payroll $ 578,500 Efficiency variance $ 5,880 F Rate variance $ 142,400 U What were the standard direct labor hours for February? 91,000 92,200 89,000 92,000
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.
Information for Bonanza Company's direct labor cost for February is as follows:
Actual direct labor hours 89,000
Total direct labor payroll $ 578,500
Efficiency variance $ 5,880 F
Rate variance $ 142,400 U
What were the standard direct labor hours for February?
91,000
92,200
89,000
92,000
Labour cost variance shows difference between standard labour cost and actual labour cost. It can be due to difference in labour rate or difference in hours used.
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