Direct labor variances Bellingham (Company produces a product that requires 4 standard direct labor hours per unit at a standard hourly rate of $20 per hour. If 15,000 unit used 61,800 hours at an hourly rate of $19.85 per hour, what is the direct labor (A) rate variance, (B) time variance, and (C) cost 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.
Direct labor variances
Bellingham (Company produces a product that requires 4 standard direct labor hours per unit at a standard hourly rate of $20 per hour.
If 15,000 unit used 61,800 hours at an hourly rate of $19.85 per hour,
what is the direct labor (A) rate variance, (B) time variance, and (C) cost
variance?
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