Total fixed costs 6,100 units $ 700 $ 1,350,000 Standard quantities, standard prices, and standard unit costs follow for direct materials and direct manu facturing labor : Standard Price Standard Unit Cost Direct materials Direct manufacturing labor Standard Quantity 16 pounds 3.8 hours 14 per pound $ 30 per hour $224 $114 During 2014actual number of units produced and sold was 5,100, at an average selling price of $730. Actual cost of direct materials used was 1,149,400, based on 70,000 pounds purchased at $16.42 per pound. Direct manufacturing labor-hours actually used were 17,000, at the rate of 33.70 per hour. As a result, actual direct manufacturing labor costs were $
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.
Problems 7-29 Flexible budget, direct materials, and direct manufacturing labor variances. Milan Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static budget for 2014: Expected production and sales Expected selling price per unit Total fixed costs 6,100 units $ 700 $ 1,350,000 Standard quantities, standard prices, and
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