Lee Company’s operations for April discussed the following data relating to direct labor: Actual cost P10,000 Rate variance (favorable) 1,000 Efficiency variance (unfavorable) 1,500 Standard cost P9,500 Actual direct labor hours for the month of April amounted to 2,000. What was the standard direct labor hourly rate?
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.
Lee Company’s operations for April discussed the following data relating to direct labor:
Actual cost P10,000
Rate variance (favorable) 1,000
Efficiency variance (unfavorable) 1,500
Actual direct labor hours for the month of April amounted to 2,000. What was the standard direct labor hourly rate?
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