Sheffield Manufacturing, which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (6 pounds at $2 per pound) Direct labor (2 hours at $12 per hour) During the month of April, the company manufactures 460 units and incurs the following actual costs. Direct materials purchased and used (2.970 pounds) Direct labor (930 hours) Total Variance Compute the total, price, and quantity variances for materials and labor. Identify whether each variance is favorable or unfavorable. Price Variance Quantity Variance $12 $24 S S $6.534 $10,695 Materials $ $ Labor
Sheffield Manufacturing, which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (6 pounds at $2 per pound) Direct labor (2 hours at $12 per hour) During the month of April, the company manufactures 460 units and incurs the following actual costs. Direct materials purchased and used (2.970 pounds) Direct labor (930 hours) Total Variance Compute the total, price, and quantity variances for materials and labor. Identify whether each variance is favorable or unfavorable. Price Variance Quantity Variance $12 $24 S S $6.534 $10,695 Materials $ $ Labor
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:Sheffield Manufacturing, which produces a single product, has prepared the following standard cost sheet for one unit of the product.
Direct materials (6 pounds at $2 per pound)
Direct labor (2 hours at $12 per hour)
During the month of April, the company manufactures 460 units and incurs the following actual costs.
Direct materials purchased and used (2.970 pounds)
Direct labor (930 hours)
Total Variance
Compute the total, price, and quantity variances for materials and labor. Identify whether each variance is favorable or unfavorable.
Price Variance
Quantity Variance
$12
$24
S
$
$6.534
$10,695
Materials
000
$
$
Labor
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Step 1: Introduce to direct material and direct labor variance
VIEWStep 2: Working for standard material quantity and standard labor hours
VIEWStep 3: Working for actual direct material price and direct labor rate
VIEWStep 4: Working for material variances
VIEWStep 5: Working for labor variances
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