Information on ABC Company’s direct labor costs for the month of January is as follows: Actual direct labor rate P7.50 Standard direct labor hours allowed 11,000 Actual direct labor hours 10,000 Direct labor price variance – unfavorable P5,000 The standard direct labor rate in January was Group of answer choices P7.00 P8.00 P8.05 P6.95
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 on ABC Company’s direct labor costs for the month of January is as follows:
Actual direct labor rate P7.50
Standard direct labor hours allowed 11,000
Actual direct labor hours 10,000
Direct labor price variance – unfavorable P5,000
The standard direct labor rate in January was
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