What was Sky’s direct labor efficiency variance?
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.
Sky Company’s direct labor cost for the month of December 2020 were as follows:
Standard direct labor hours 21,000
Actual direct labor hours 20,000
Direct labor rate variance, unfavorable P3,000
Total payroll P126,000
What was Sky’s direct labor efficiency variance?
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