The standard cost of one unit of product includes 3 hours of direct labor at €11.50 per hour. Company A's labor rate (price) variance was €142 unfavorable. The efficiency variance was €506 unfavorable and 200 units were produced. The actual labor hours? 1. 523 hours 2. 644 hours 3. 492 hours 4. 505 hours
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
1. 523 hours
2. 644 hours
3. 492 hours
4. 505 hours
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