The Macon Company uses the high-low method to determine its cost equation. The following information was gathered for the past year: Machine Hours Direct Labor Costs Busiest month (June) 14,000 $ 265,000 Slowest month (December) 6,000 $ 129,000 What are the direct labor costs per machine hour?
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 Macon Company uses the high-low method to determine its cost equation. The following information was gathered for the past year:
| Machine Hours | Direct Labor Costs | |
|---|---|---|
| Busiest month (June) | 14,000 | $ 265,000 |
| Slowest month (December) | 6,000 | $ 129,000 |
What are the direct labor costs per machine hour?
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