The following direct labor data pertain to the operations of Green Vanity Company for the month of June: Standard labor rate $20.00 per hr. Actual hours incurred and used 9,000 The standard cost card shows that 5 hours are required to complete one unit of product. The actual labor rate incurred exceeded the standard rate by 10%. Two thousand units were manufactured in June. Instructions (a) Calculate the price, quantity, and total labor variances. And indicate whether the variance is favorable or unfavorable. (b) Journalize the entries to record the labor variances.
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.
- The following direct labor data pertain to the operations of Green Vanity Company for the month of June:
Standard labor rate $20.00 per hr.
Actual hours incurred and used 9,000
The
Two thousand units were manufactured in June.
Instructions
(a) Calculate the price, quantity, and total labor variances. And indicate whether the variance is favorable or unfavorable.
(b)
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