The following information describes a company's usage of direct labor in a recent period: Actual direct labor hours used 35,000 Actual rate per hour $21.00 Standard rate per hour $10.00 Standard hours for units produced
The following information describes a company's usage of direct labor in a recent period: Actual direct labor hours used 35,000 Actual rate per hour $21.00 Standard rate per hour $10.00 Standard hours for units produced
Chapter1: Financial Statements And Business Decisions
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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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Question
The following information describes a company's usage of direct labor in a recent period:
|
Actual direct labor hours used
|
35,000
|
|
Actual rate per hour
|
$21.00
|
|
Standard rate per hour
|
$10.00
|
|
Standard hours for units produced
|
25,000
|
How much is the direct labor efficiency variance?
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