Miguez Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 2.8 liters $ 7.50 per liter $ 21.00 Direct labor 0.5 hours $ 27.00 per hour $ 13.50 Variable overhead 0.5 hours $ 2.50 per hour $ 1.25 The company budgeted for production of 3100 units in September, but actual production was 3000 units. The company used 5940 liters of direct material and 1730 direct labor-hours to produce this output. The company purchased 6300 liters of the direct material at $7.70 per liter. The actual direct labor rate was $29.10 per hour and the actual variable overhead rate was $2.40 per hour. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead rate variance for September is:
Miguez Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 2.8 liters $ 7.50 per liter $ 21.00 Direct labor 0.5 hours $ 27.00 per hour $ 13.50 Variable overhead 0.5 hours $ 2.50 per hour $ 1.25 The company budgeted for production of 3100 units in September, but actual production was 3000 units. The company used 5940 liters of direct material and 1730 direct labor-hours to produce this output. The company purchased 6300 liters of the direct material at $7.70 per liter. The actual direct labor rate was $29.10 per hour and the actual variable overhead rate was $2.40 per hour. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead rate variance for September is:
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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Miguez Corporation makes a product with the following standard costs:
The company budgeted for production of 3100 units in September, but actual production was 3000 units. The company used 5940 liters of direct material and 1730 direct labor-hours to produce this output. The company purchased 6300 liters of the direct material at $7.70 per liter. The actual direct labor rate was $29.10 per hour and the actual variable overhead rate was $2.40 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The variable overhead rate variance for September is:
| Standard Quantity or Hours |
Standard Price or Rate |
Standard Cost Per Unit | |||||||
| Direct materials | 2.8 | liters | $ | 7.50 | per liter | $ | 21.00 | ||
| Direct labor | 0.5 | hours | $ | 27.00 | per hour | $ | 13.50 | ||
| Variable |
0.5 | hours | $ | 2.50 | per hour | $ | 1.25 |
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The variable overhead rate variance for September is:
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