Standard wage per hr. Standard labor time per faucet Standard number of Ibs. of brass $20.00 30 min. 2.5 lbs. Standard price per Ib. of brass Actual price per Ib. of brass Actual Ibs. of brass used during the week Number of faucets produced during the week Actual wage per hr. Actual hrs. for the week (70 employees x 38 hours) $1.80 $1.95 13,000 lbs. 5,000 $18.75 2,660
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.
Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 70 employees. Each employee presently provides 38 hours of labor per week. Information about a production week is as follows:
Instructions
Determine (a) the
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