The following labor standards have been established for a particular product: Standard labor-hours per unit of output ........... ....... 1.7 hour Standard labor rate ........ $14.05 per hour The following data pertain to operations concerning the product for the last month: Actual hour worked ..... 3700 hours Actual total labor cost ...... $ 50690 Actual output ....... 2300 units What is the labor rate variance for the month?
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 labor standards have been established for a particular product:
Standard labor-hours per unit of output ........... ....... 1.7 hour
Standard labor rate ........ $14.05 per hour
The following data pertain to operations concerning the product for the last month:
Actual hour worked ..... 3700 hours
Actual total labor cost ...... $ 50690
Actual output ....... 2300 units
What is the labor rate variance for the month?
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