Materials and Labor Variances The following actual and standard cost data for direct materials and direct labor relate to Hadley Company's production of 2,000 units of a product: Actual costs Standard costs Direct materials 3,900 lb. @ $5.20 4,000 lb. @ $5.10 Direct labor 6,200 hr. @ $8.40 6,000 hr. @ $8.60 Determine the following variances: a. Materials price b. Materials efficiency c. Labor rate d. Labor efficiency
Materials and Labor Variances The following actual and standard cost data for direct materials and direct labor relate to Hadley Company's production of 2,000 units of a product: Actual costs Standard costs Direct materials 3,900 lb. @ $5.20 4,000 lb. @ $5.10 Direct labor 6,200 hr. @ $8.40 6,000 hr. @ $8.60 Determine the following variances: a. Materials price b. Materials efficiency c. Labor rate d. Labor efficiency
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
Section: Chapter Questions
Problem 1PB: Direct materials and direct labor variance analysis Lenni Clothing Co. manufactures clothing in a...
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Concept explainers
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.
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E10-2A | Materials and Labor Variances | |||||
The following actual and |
||||||
Actual costs | Standard costs | |||||
Direct materials | 3,900 lb. @ $5.20 | 4,000 lb. @ $5.10 | ||||
Direct labor | 6,200 hr. @ $8.40 | 6,000 hr. @ $8.60 | ||||
Determine the following variances: | ||||||
a. Materials price | ||||||
b. Materials efficiency | ||||||
c. Labor rate | ||||||
d. Labor efficiency |
|
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