Rubble, Inc. produced 1,040 backpacks, the company's product in 2020. The standard cost was 3 yards of cloth at a standard cost of $0.80 per yard. The accounting records show that 2,900 yards of cloth were used, and the company paid $1.05 per yard. Standard time to make the backpacks was 2 direct labor hours per unit at a standard rate of $9.80 per direct labor hours. Employees worked a total of 1,800 hours and were paid $9.15 per hour. Calculate the direct labor efficiency variance.
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.
Rubble, Inc. produced 1,040 backpacks, the company's product in 2020. The
Calculate the direct labor efficiency variance.
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