Direct materials (4.0 pounds @ $4.00 per pound) Direct labor (1.8 hours @ $13.00 per hour) Overhead (1.8 hours @ $18.50 per hour) Standard cost per unit $ 16.00 23.40 33.30 $ 72.70 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials Indirect labor $ 15,000 75,000 Power 15,000 Maintenance 30,000 Total variable overhead costs 135,000 Fixed overhead costs 25,000 71,000 17,000 Supervisory salaries 251,500 364,500 Depreciation-Building Depreciation-Machinery Taxes and insurance Total fixed overhead costs Total overhead costs $ 499,500 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,000 pounds @ $4.20 per pound) Direct labor (22,000 hours @ $13.10 per hour) Overhead costs Indirect materials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 256,200 288,200 $ 41,900 176,200 17,250 34,500 25,000 95,850 15,300 251,500 657,500 $ 1,201,900 Compute the direct labor variance, including its rate and efficiency variances. te: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to o decimal places.

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 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 t…