The following information describes a company's usage of direct labor in a recent period. Actual direct labor hours used (AH) Actual direct labor rate per hour (AR) Standard direct labor rate per hour (SR) Standard direct labor hours for units produced (SH) $ Actual Cost $ 63,000 14 12 65,000 Compute the direct labor rate and efficiency variances for the period. Standard Cost
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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