Wilson's Winter Woolens manufactures jackets and other wool clothing. A certain designed ski parka requires the following: Direct materials standard - 2 square yards at $13.50 per yard Direct manufacturing Labor standard - 1.5 hours at $20.00 per hour During the third quarter, the company made 1,500 parkas and used 3,150 square yards of fabric costing $39,375. Direct Labor totaled 2,100 hours for $45,150. Required: Compute the direct materials price and efficiency variances for the quarter. Compute the direct manufacturing Labor price and efficiency variances for the
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.
Wilson's Winter Woolens manufactures jackets and other wool clothing. A certain designed ski parka requires the following:
Direct materials standard - 2 square yards at $13.50 per yard
Direct manufacturing Labor standard - 1.5 hours at $20.00 per hour
During the third quarter, the company made 1,500 parkas and used 3,150 square yards of fabric costing $39,375. Direct Labor totaled 2,100 hours for $45,150.
Required:
- Compute the direct materials price and efficiency variances for the quarter.
- Compute the direct manufacturing Labor price and efficiency variances for the
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