Standard Faucets uses standard costing and recorded the following data for the month of August: Standard direct labor rate $22.50 per hour Standard hours allowed for actual production 20,000 hours Actual direct labor rate $22.75 per hour Labor efficiency variance $18,000 favorable How much is the labor rate variance for August? $4,750 unfavorable $5,200 unfavorable $4,700 unfavorable $5,700 unfavorable $4,800 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.
Standard Faucets uses
Standard direct labor rate $22.50 per hour
Standard hours allowed for actual production 20,000 hours
Actual direct labor rate $22.75 per hour
Labor efficiency variance $18,000 favorable
How much is the labor rate variance for August?
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$4,750 unfavorable |
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$5,200 unfavorable |
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$4,700 unfavorable |
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$5,700 unfavorable |
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$4,800 unfavorable |
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