Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 5.8 ounces $ 3.00 per ounce Direct labor 0.5 hours $17.40 $12.00 per hour $6.00 Variable overhead 0.5 hours $5.00 per hour $2.50 The company reported the following results concerning this product in June. Originally budgeted output Actual output Raw materials used in production Purchases of raw materials Actual direct labor-hours Actual cost of raw materials purchases Actual direct labor cost Actual variable overhead cost 1,212 Favorable 3,800 units 3,400 units 22,000 ounces 21,900 ounces The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases va hen the materials are purchased. e variable overhead rate variance for June is: ,200 Favorable 520 hours $ 42,500 $ 13,800 $ 3,800

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…