Question Razi Company is a manufacturer of the leather belt based in Kelang, Selangor. The company estimated a total of 400 units of production for the most recent period. The standard costs per unit are given below: (see the photo) Required: From the foregoing information, compute the following variances and indicate whether they are favorable (F) or unfavorable (U). State why each of the variances occurred. Direct labour efficiency variance Variable overhead spending variance Variable overhead efficiency variance
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.
Question
Razi Company is a manufacturer of the leather belt based in Kelang, Selangor. The company estimated a total of 400 units of production for the most recent period. The
(see the photo)
Required:
From the foregoing information, compute the following variances and indicate whether they are favorable (F) or unfavorable (U). State why each of the variances occurred.
Direct labour efficiency variance
Variable
Variable overhead efficiency variance
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