von Company set stan uses 18,000 hours of direct labor at a $284,400 total cost to produce E direct labor at a $348,700 total cost to produce 6,600 units of product.
von Company set stan uses 18,000 hours of direct labor at a $284,400 total cost to produce E direct labor at a $348,700 total cost to produce 6,600 units of product.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Javon Company set standards of 3 hours of direct labor per unit at a rate of $15.60 per hour. During October, the company actually
uses 18,000 hours of direct labor at a $284,400 total cost to produce 6,200 units. In November, the company uses 22,000 hours of
direct labor at a $348,700 total cost to produce 6,600 units of product.
AH = Actual Hours
SH= Standard Hours
AR Actual Rate
SR Standard Rate
(1) Compute the direct labor rate variance, the direct labor efficiency varlance, and the total direct labor varlance for each of these two
months.
(2) Javon Investigates variances of more than 5% of actual direct labor cost. Which direct labor varlances will the company Investigate
further?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor variance for each of these two months.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.
Actual Cost
Actual Cost
Required 1 Required 2
October
< Required 1
November
Standard Cost
Javon investigates variances of more than 5% of actual direct labor cost. Which direct labor variances will the company
investigate further?
Which direct labor variances will the company investigate further?
Required 2
Standard Cost
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