Marv Company's direct labor costs for manufacturing its only product were as follows for October: Standard direct labor hours per unit of product 2.0 Budgeted finished units for the period 6,800 Actual number of finished units produced 5,200 Standard wage rate per direct labor hour (SP) $ 28.00 Direct labor costs incurred $ 299,000 Actual wage rate per direct labor hour (AP) $ 26.00 The direct labor rate variance for October, rounded to the nearest dollar, was: Multiple Choice $23,000 favorable. $51,200 unfavorable. $2,200 unfavorable. $20,400 favorable. $30,800 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.
Marv Company's direct labor costs for manufacturing its only product were as follows for October:
| Standard direct labor hours per unit of product | 2.0 | ||
| Budgeted finished units for the period | 6,800 | ||
| Actual number of finished units produced | 5,200 | ||
| Standard wage rate per direct labor hour (SP) | $ | 28.00 | |
| Direct labor costs incurred | $ | 299,000 | |
| Actual wage rate per direct labor hour (AP) | $ | 26.00 | |
The direct labor rate variance for October, rounded to the nearest dollar, was:
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$23,000 favorable.
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$51,200 unfavorable.
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$2,200 unfavorable.
-
$20,400 favorable.
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$30,800 unfavorable.
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