New Jersey Valve Company manufactured 8,000 units during January of a control valve used by milk processors in its Camden plant Records indicated the following: Direct labor Direct material purchased Direct material used 48,900 hour at $15.20 per hour 25,000 pounds at $3.30 per pound 23,400 pounds The control valve has the following standard prime costs: Direct material 3 pounds at $3.20 per pound Direct labor 6 hour at $15.50 per hour $ 9.60 93.00 Standard prime cost per unit $ 102.60 Required: 1. Prepare a schedule of standard production costs for January, based on actual production of 8,000 units. 2. For the month of January, compute the following variances. Complete this question by entering your answers in the tabs below. Required 1 Required 2 For the month of January, compute the following variances. Note: Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). a. Direct-material price variance $ 2,340 b. Direct-material quantity variance Direct material purchase price variance

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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.