Records at the Farnsworth Corporation contained the following data for the most recent period of activity: Actual total direct labor cost $ 472,360 Actual direct labor-hours worked Standard direct labor-hours allowed for actual output (flexible budget) Direct labor price variance Actual variable overhead Standard variable overhead rate per standard direct labor-hour Variable overhead is applied based on standard direct labor-hours allowed. Required: Compute the labor and variable overhead price and efficiency variances. Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or unfavorable. If there is no effect, do not select either option. Direct labor Price variance Efficiency variance Variable overhead: Price variance Efficiency variance 15, 120 14,240 $45,500 F $ 347,500 $ 21

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…