The per-unit standards for direct labor are 1.5 direct labor hours at $15 per hour. If in producing 2900 units, the actual direct labor cost was $58125 for 3750 direct labor hours worked, the total direct labor variance is $7125 unfavorable. $2900 unfavorable. $7125 favorable. $3375 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.
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