Problem 3: Variance Analysis (NEW Problem INFORMATION!!) Our company had the following data regarding direct materials and direct labor usage this year. Direct Materials Purchased 65960 feet at a cost of $15 per foot 65400 feet 97900 hours at a rate of $14 per hour 32700 units Direct Materials Used Direct Labor Used Actual units produced The standards set by our company include the following: Direct materials 2 feet at a cost of $17 per foot Direct labor 3 hours used per unit at a cost of $13 per hour Overhead 80% of direct labor cost Calculate the direct material and direct labor variances and then comment on the results. Direct Material Price Variance SHOW AND CLEARLY LABEL ALL WORK
Problem 3: Variance Analysis (NEW Problem INFORMATION!!) Our company had the following data regarding direct materials and direct labor usage this year. Direct Materials Purchased 65960 feet at a cost of $15 per foot 65400 feet 97900 hours at a rate of $14 per hour 32700 units Direct Materials Used Direct Labor Used Actual units produced The standards set by our company include the following: Direct materials 2 feet at a cost of $17 per foot Direct labor 3 hours used per unit at a cost of $13 per hour Overhead 80% of direct labor cost Calculate the direct material and direct labor variances and then comment on the results. Direct Material Price Variance SHOW AND CLEARLY LABEL ALL WORK
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Problem 3: Variance Analysis
(NEW Problem INFORMATION!!)
Our company had the following data regarding direct materials and direct labor usage this year.
Direct Materials Purchased 65960 feet at a cost of $15 per foot
Direct Materials Used 65400 feet
Direct Labor Used 97900 hours at a rate of $14 per hour
Actual units produced 32700 units
The standards set by our company include the following:
Direct materials 2 feet at a cost of $17 per foot
Direct labor 3 hours used per unit at a cost of $13 per hour
Overhead 80% of direct labor cost
Calculate the direct material and direct labor variances and then comment on the results.
Direct Material Price Variance:
Direct Material Usage Variance:
SHOW AND CLEARLY LABEL ALL WORK
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