Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours 6.3 ounces 0.8 hours 0.8 hours Originally budgeted output Actual output Raw materials used in production Purchases of raw materials. Actual direct labor-hours. Direct materials Direct labor Variable overhead. The company reported the following results concerning this product in June. Standard Price or Rate $ 2.00 per ounce $11.00 per hour. $ 6.00 per hour eriala murchases 3,300 units 2,600 units 21,300 ounces 22,400 ounces 5,600 hours $ 42,000 Standard Cost Per Unit $ 12.60 $ 8.80 $ 4.80
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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![Tharaldson Corporation makes a product with the following standard costs:
Standard
Quantity or
Hours:
Standard Price or Rate
$ 2.00 per ounce
$11.00 per hour.
$6.00 per hour
6.3 ounces
Direct materials
Direct labor
0.8 hours
Variable overhead
0.8 hours
The company reported the following results concerning this product in June.
Originally budgeted output
Actual output
Raw materials used in production
Purchases of raw materials
Actual direct labor-hours
Actual cost of raw materials purchases
Actual direct labor cost
Actual variable overhead cost
The materials price variance for June is:
3,300 units
2,600 units
21,300 ounces
22,400 ounces
5,600 hours
$ 42,000
$ 13,300
$ 3,650
Standard Cost
Per Unit
$ 12.60
$ 8.80
4.80
$
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are
purchased.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5c98d29f-bdf5-451b-86b0-11e1036a4a15%2Fa37a3514-1c14-4062-9985-9d18dc6414cd%2F1jyz58_processed.jpeg&w=3840&q=75)
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