Lucky Company's direct labor information for the month of February is as follows: Actual direct labor hours worked (AQ) 70,000 Standard direct labor hours allowed (SQ) 75,000 Total payroll for direct labor $ 1,050,000 Direct labor efficiency variance $ 69,000 The direct labor rate variance for February was: Multiple Choice $105,000 unfavorable. $90,000 unfavorable. $98,000 unfavorable. $84,000 unfavorable. $168,000 unfavorable.
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.
Lucky Company's direct labor information for the month of February is as follows:
| Actual direct labor hours worked (AQ) | 70,000 |
|---|---|
| Standard direct labor hours allowed (SQ) | 75,000 |
| Total payroll for direct labor | $ 1,050,000 |
| Direct labor efficiency variance | $ 69,000 |
The direct labor rate variance for February was:
-
$105,000 unfavorable.
-
$90,000 unfavorable.
-
$98,000 unfavorable.
-
$84,000 unfavorable.
-
$168,000 unfavorable.
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