Peking Palace Company reported the following: Standard hours per unit 2.5 hours Standard rate per hour $16.00 Actual hours used 12,560 Actual rate per hour $15.50 Number of units produced 4,900 What is the direct labor time variance? a.$(4,805) favorable b.$(4,960) favorable c.$4,805 unfavorable d.$4,960 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.
- Peking Palace Company reported the following:
|
Standard hours per unit |
2.5 hours |
|
Standard rate per hour |
$16.00 |
|
Actual hours used |
12,560 |
|
Actual rate per hour |
$15.50 |
|
Number of units produced |
4,900 |
What is the direct labor time variance?
a.$(4,805) favorable
b.$(4,960) favorable
c.$4,805 unfavorable
d.$4,960 unfavorable
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