Provo Racket Company manufactures two types of tennis rackets, the Youth and Adult models. The production budget for July for the two rackets is as follows: Line Item Description Youth Adult Production budget 6,700 units 18,700 units Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows: Line Item Description Forming Department Assembly Department Youth 0.20 hour per unit 0.40 hour per unit Adult 0.35 hour per unit 0.65 hour per unit The direct labor rate for each department is as follows: Forming Department $17.00 per hour Assembly Department $8.00 per hour Prepare the direct labor cost budget for July. Provo Racket CompanyDirect Labor Cost BudgetFor the Month Ending July 31 Line Item Description Forming Department Assembly Department Hours required for production: Youth Youth Youth Adult Adult Adult Total Total Total Hourly rate x$Hourly rate x$Hourly rate Total direct labor cost $Total direct labor cost $Total direct labor cost
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 cost budget
Provo Racket Company manufactures two types of tennis rackets, the Youth and Adult models. The production budget for July for the two rackets is as follows:
| Line Item Description | Youth | Adult |
|---|---|---|
| Production budget | 6,700 units | 18,700 units |
Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:
| Line Item Description | Forming Department | Assembly Department |
|---|---|---|
| Youth | 0.20 hour per unit | 0.40 hour per unit |
| Adult | 0.35 hour per unit | 0.65 hour per unit |
The direct labor rate for each department is as follows:
Forming Department $17.00 per hour
Assembly Department $8.00 per hour
Prepare the direct labor cost budget for July.
Provo Racket CompanyDirect Labor Cost BudgetFor the Month Ending July 31
| Line Item Description | Forming Department | Assembly Department |
|---|---|---|
| Hours required for production: | ||
| Youth | Youth | Youth |
| Adult | Adult | Adult |
| Total | Total | Total |
| Hourly rate | x$Hourly rate | x$Hourly rate |
| Total direct labor cost | $Total direct labor cost | $Total direct labor cost |
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