Variance Analysis Practice Exercise SeverCo manufactured 25,000 units, using 175,000 square feet of materials, purchased...
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Variance Analysis Practice Exercise SeverCo manufactured 25,000 units, using 175,000 square feet of materials, purchased at $1.15 per square foot. This required 425 direct labor hours that cost $17.25 per hour. The standard for production is 8 square feet per unit, at a standard cost of $1.25 per square foot. The labor standard is currently set at 0.032 direct labor hours per unit, at a standard cost of $14.00 per hour. Variance Calculations \begin{tabular}{l} Price Variance (aka Rate Variance or Spending Variance) \\ (AP-SP)*AQ \\ \hline AP = Actual Price for one unit of input (e.g. one pound of material, one hour of labor, etc.) \\ \hlineSP= Standard Price for one unit of input (e.g. one pound of material, one hour of labor, etc.) \\ AQ= Actual quantity of those inputs (e.g. pounds of materials or hours of labor) needed to produce the \\ number of units that you have actually produced in total. \end{tabular} Direct Materials Price Variance Labor Actual Price per Hour Standard Price Per Hour Actual quantity of hours needed to produce your current actual level of Standard quantity of hours needed to produce your current actual level of
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