Standard Costing and Variance Analysis at IBM

Values:

• Standard Rate per Hour: $20
• Actual Hours Worked: 900 hours
• Standard Hours Allowed: 1,000 hours

Requirements: Present the variance analysis in a paragraph format.

IBM is analyzing the direct labor efficiency variance for its operations. The standard rate per hour is $20, and the standard hours allowed for actual production were 1,000 hours. However, actual hours worked amounted to 900 hours. This variance analysis helps IBM assess its labor productivity and operational efficiency, facilitating management decisions to improve performance and reduce costs.