mavy Product, Inc developed standard costs for drect material and direct labor lestmated the folowing standa Dred materials Drect labor Budgeted quantity 07 pounds 02 hours Budgeted erice $50 per pound $15 per hour Dung June, Hey Products produced and sold 25.000 containers using 19.000 pounds of deect materastn verage cost per pound of S53 and 17.500 direct manufacturing labor-hours at an average wage of S16.00 per ho Bune's direct matetal fexble-budget variance is OA M7000 tarorable R 75.000 unfavorable OC S132000 unfavorable OD S27300 avorable
mavy Product, Inc developed standard costs for drect material and direct labor lestmated the folowing standa Dred materials Drect labor Budgeted quantity 07 pounds 02 hours Budgeted erice $50 per pound $15 per hour Dung June, Hey Products produced and sold 25.000 containers using 19.000 pounds of deect materastn verage cost per pound of S53 and 17.500 direct manufacturing labor-hours at an average wage of S16.00 per ho Bune's direct matetal fexble-budget variance is OA M7000 tarorable R 75.000 unfavorable OC S132000 unfavorable OD S27300 avorable
Chapter1: Financial Statements And Business Decisions
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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.
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Transcribed Image Text:Heavy Products, Inc developed standard costs for drect material and direct labor. In 2017, All estimated the folowing standard costs for one of their major products, the 10- galon plastic containet
Drect materials
Direct labor
Budgeted quantity
07 pounds
02 hours
Budgeted price
ss0 per pound
$15 per hour
During June, Hey Products produced and sold 26.000 containers using 19.000 pounds of drect materials at an average cost per pound of S53 and 17,500 direct manutachuring labor - hours at an average wage of $10.54 per ho
June's direct matenal ferble - budget variance is
OA M7.000 farorable
R75,000 unfavorable
OC $132.000 untavoratle
OD. S27.300 favorable
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