The following data relate to direct labor costs for the current period: Standard costs 7,500 hours at $11.70 Actual costs 6,000 hours at $12.00 What is the direct labor time variance? a. $18,000 favorable b. $17,550 unfavorable c. $17,550 favorable d. $18,000 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.
| 7,500 hours at $11.70 | |
| Actual costs | 6,000 hours at $12.00 |
What is the direct labor time variance?
The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31:
|
|
Rails Division |
Locomotive Division |
Corporate Total |
|||
|
Cost of goods sold |
$ 47,200 |
|
$30,720 |
|
|
|
|
Direct operating expenses |
27,200 |
|
20,040 |
|
|
|
|
Sales |
108,000 |
|
78,000 |
|
|
|
|
Interest expense |
|
|
|
|
$ 2,040 |
|
|
General overhead |
|
|
|
|
18,160 |
|
|
Income tax |
|
|
|
|
4,700 |
|
The net income for Train Corporation is
A. $48,390
B. $83,180
C. $35,940
D. $60,840
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