McCort Company employs a standard cost system in which direct materials inventory is carried at standard cost. The company has established the following standards for the prime costs of one unit of product: Standard Quantity Standard Price Standard Cost Direct materials 12.0 pounds $14.00/pound 168.00 Direct labor 2.6 hours $44.00/hour $114.40 During April, the company purchased 330,000 pounds of direct material at a total cost of $4,686,000. The total factory wages for June were $3,200,000, of which 90% was for direct labor. The company manufactured 25,000 units of product during April using 302,000 pounds of direct material and 64,000 direct labor hours. What is the direct labor rate variance for April? Please do not use any unit sign in your answer. Also, please do not mention Fav or Unfav.
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.
McCort Company employs a
|
Standard Quantity |
Standard Price |
Standard Cost |
Direct materials |
12.0 pounds |
$14.00/pound |
168.00 |
Direct labor |
2.6 hours |
$44.00/hour |
$114.40 |
During April, the company purchased 330,000 pounds of direct material at a total cost of $4,686,000. The total factory wages for June were $3,200,000, of which 90% was for direct labor. The company manufactured 25,000 units of product during April using 302,000 pounds of direct material and 64,000 direct labor hours.
What is the direct labor rate variance for April?
Please do not use any unit sign in your answer. Also, please do not mention Fav or Unfav.
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