The following information is available for a manufacturer. Compute the direct labor rate and efficiency variances and label them as favorable (F) or unfavorable (U). Actual direct labor cost (6,250 hours @ $13.10 per hour) $81,875 Standard direct labor hours per unit . 2.0 hours Standard direct labor rate per hour $13.00 Actual production (units) . 2,500 units Budgeted production (units) . 3,000 units
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.
The following information is available for a manufacturer. Compute the direct labor rate and efficiency
variances and label them as favorable (F) or unfavorable (U). Actual direct labor cost (6,250 hours @ $13.10 per hour) $81,875
Standard direct labor hours per unit . 2.0 hours
Standard direct labor rate per hour $13.00
Actual production (units) . 2,500 units
Budgeted production (units) . 3,000 units
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