If a company calculates that the actual cost for the actual hours worked by employees was $4,300,000, and the amount budgeted for those hours actually worked was $4,800,000, the actual cost for hours worked less the budgeted cost for hours worked is s This tells you that the actual cost at actual hours worked is less than -v the budgeted cost actual hours worked. What type of variance is this? Favorable direct labor rate variance If a company calculates that the budgeted cost for actual hours worked is $160,000, and the budgeted cost at the budgeted amount of hours to have been worked is $120,000, the budgeted cost at actual time worked less the budgeted cost at budgeted hours to have been worked is $ 40,000 v. This tells you that the actual hours worked at budgeted cost is greater than - v budgeted hours worked at budgeted cost. What type of variance is this?
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.
Direct labor variance arises when budgeted labor cost is not same as actual labor cost. Labor cost consists of two parts i.e. Rate and hours.
If budgeted hours and actual hours are not equal then the variance is called direct labor time variance.
If the budgeted rate is not same as it is called direct labor rate variance.
When budgeted data is more than actual then it shows favourable variance.
When actual data is more than budgeted data then it shows unfavorable variance.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps