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    Variance analysis

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    Co provides the following standard cost data:

    Direct material (3 gallons at $5 per gallon) $15.00
    Direct Labor (2 hours at $12 per hour) $24.00
    During the period, the company produced and sold 26,000 units, incurring the following costs:
    Direct material (75,000 gallons at $4.90 per gallon
    Direct Labor (47,500 hours at $12.05 per hour

    The materials usage variance was:
    a) $15,000 favorable b)$15,000 unfavorable c)$14,700 favorable d) $14,700 unfavorable

    Please also explain how one would get labor usage variance.

    © BrainMass Inc. brainmass.com June 3, 2020, 9:27 pm ad1c9bdddf
    https://brainmass.com/business/accounting/variance-analysis-example-problem-182409

    Solution Preview

    Standard quantity required for actual production = 26000 units * 3 gallons per unit = 78000 gallons

    Material usage variance = Standard cost per gallon* (actual quantity - ...

    Solution Summary

    Material usage variance and labor usage variance are calculated.

    $2.19

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