Stanford Company makes a single product and uses standard costing. Some data concerning this product for the month of May follow: Labor rate variance:....................................... P 7,000 F Labor efficiency variance:................................ P12,000 F Variable overhead efficiency variance:................... P 4,000 F Number of units produced:.................................. 10,000 Standard labor rate per direct labor hour:.................. $12 Standard variable overhead rate per direct labor hour: $4 Actual labor hours used: 14,000 Actual variable manufacturing overhead costs:........... $58,290 1. How much is the total standard cost for variable overhead for May was: . 2. How much is the standard hours allowed to make one unit of finished product are:
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.
Stanford Company makes a single product and uses
Labor rate variance:....................................... P 7,000 F
Labor efficiency variance:................................ P12,000 F
Variable
Number of units produced:.................................. 10,000
Standard labor rate per direct labor hour:.................. $12
Standard variable overhead rate per direct labor hour: $4
Actual labor hours used: 14,000
Actual variable manufacturing overhead costs:........... $58,290
1. How much is the total standard cost for variable overhead for May was: .
2. How much is the standard hours allowed to make one unit of finished product are:
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