Ipod Man Inc. has debited direct labor efficiency variance in the amount of P3,000 in the journal entry to record the variance. During the year, it manufactured 3,200 units of product using 6,600 direct labor hours at a total cost of P79,200. Each unit of product requires 2 standard direct labor hours. What is the debit/credit to direct labor rate variance at the time of recording? P19,800 credit P6,400 debit P16,800 credit P3,000 debit
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.
- Ipod Man Inc. has debited direct labor efficiency variance in the amount of P3,000 in the
journal entry to record the variance. During the year, it manufactured 3,200 units of product using 6,600 direct labor hours at a total cost of P79,200. Each unit of product requires 2 standard direct labor hours.
What is the debit/credit to direct labor rate variance at the time of recording?
- P19,800 credit
- P6,400 debit
- P16,800 credit
- P3,000 debit
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