The standard cost of product 5252 includes 1.9 hours of direct labor at $12.60 per hour. The predetermined overhead rate is $22 per direct labor hour. During July, the company incurred 4,000 hours of direct labor at an average rate of $12.90 per hour and $81,300 of manufacturing overhead costs. It produced 2,000 units. (a) Compute the total, price, and quantity variances for labor. Total labor variance Labor price variance Labor quantity variance (b) Compute the total overhead variance. Total overhead variance $
The standard cost of product 5252 includes 1.9 hours of direct labor at $12.60 per hour. The predetermined overhead rate is $22 per direct labor hour. During July, the company incurred 4,000 hours of direct labor at an average rate of $12.90 per hour and $81,300 of manufacturing overhead costs. It produced 2,000 units. (a) Compute the total, price, and quantity variances for labor. Total labor variance Labor price variance Labor quantity variance (b) Compute the total overhead variance. Total overhead variance $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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Transcribed Image Text:The standard cost of product 5252 includes 1.9 hours of direct labor at $12.60 per hour. The predetermined overhead rate is $22 per
direct labor hour. During July, the company incurred 4,000 hours of direct labor at an average rate of $12.90 per hour and $81,300 of
manufacturing overhead costs. It produced 2,000 units.
Compute the total, price, and quantity variances for labor.
Total labor variance
Labor price variance
Labor quantity variance
(b)
$
Compute the total overhead variance.
Total overhead variance $
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