Requirement: Determine the direct materials price variance and direct labor eficiency vaiance. (Rousd all he ntemuediste caleslations to 2 decimal places)
Requirement: Determine the direct materials price variance and direct labor eficiency vaiance. (Rousd all he ntemuediste caleslations to 2 decimal places)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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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Question
Transcribed Image Text:A company's standard cost system requires 7,000 direct labor
hours per month jg. qtler taproduce 3,500 units of handbags.
The management has set 2 standard of using 4.3 yards of
direct materials per unit of handbag. Information regarding
standard costs is mentioned below:
Particulars
Total standard direct materials cost
Total standard direct labor cost
Total standard variable manufacturing overhead
(based on direct labor-hours)
Amount
Particulars
Total actual direct materials cost
Total actual direct labor cost
Total actual variable manufacturing overhead
$54,250
$42,000
$18,200
During November, the company produced 3,600 wits of
handbags using 6 960 direct labor hours. Actual cots recordad
isthe month of Novemb are ss allows:
Amount
$64,800
$52,200
$24,360
The company used 21,600 yards of materials to produce 3,600
unis of handbags. Materials purchased during the month were
used in production.
Requirement: Determine the direct materials price variance and
direct labor eficiency vaiance. (Rousd all he ntemuediste
caleslations to 2 decimal places)
Direct materials price variance is $9,504 U and direct labor efficiency variance is $1,440 U.
Direct materials price variance is $3,640 U and direct labor efficiency variance is $240U.
Direct materials price variance is $9,504 F and direct labor efficiency variance is $1,440 F.
Direct materials price variance is $3640 F and direct labor efficiency variance is $240F.
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