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    Variance Analysis of the Clemson Company

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    Clemson company prepares its budgets on the basis of standard costs.A resposibility report is prepared monthly showing the differences between master budget and actual results. Variances are analysed and reported separately.
    There are no materials inventories.
    The following information relates to the current period;

    Standard costs(per unit of output)

    Direct materials,2 gallons @ $6.00 per gallon $12.00
    Direct labor,4 hours @ $24 per hour 96.00
    Factory overhead
    Variable (25% of direct labor cost) 24.00
    total standard cost per unit $132.00

    Actual costs and activities for the month follow:

    Materials used 4,200 gallons at $5.40 per gallon
    output 1,900 units
    Actual labor costs 6,400 hours at $30 per hour
    Actual variable overhead $54,000

    Prepare a cost variance analysis for variance costs.

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    Solution Summary

    This solution shows how to prepare a cost variance analysis for the variance costs incurred by the Clemson Company.