Coffen Corp. employs engineers and draftspeople. The average hourly rates are $60 for engineers and $30 for draftspeople. For one project, the standard was set at 400 hours of engineer time and 600 hours of draftsperson time. Actual hours worked on this project were: Engineers—500 hours at $65 per hour Draftspeople—500 hours at $32 per hour Determine the labor rate, mix, and yield variances for this project.
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.
Coffen Corp. employs engineers and draftspeople. The average hourly rates are $60 for engineers and $30 for draftspeople. For one project, the standard was set at 400 hours of engineer time and 600 hours of draftsperson time. Actual hours worked on this project were:
Engineers—500 hours at $65 per hour
Draftspeople—500 hours at $32 per hour
Determine the labor rate, mix, and yield variances for this project.
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