Crystal Glassware Company has the following standards and flexible-budget data. $6 per direct-labor hour 2.0 hours per unit of output Standard variable-overhead rate Standard quantity of direct labor Budgeted fixed overhead Budgeted output Actual results for April are as follows: Actual output Actual variable overhead Actual fixed overhead Actual direct labor $ 114,000 28,500 units 22,800 units $364,800 $ 110,580 57,000 hours
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.
Use the variance formulas to compute the following variances.
Note: Indicate the effect of the first three variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Select "Positive" or "Negative" for the Fixed-overhead Volume variance.
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