Requirements 1. Compute the direct labor rate variance and the direct labor efficiency variance. 2. What is the total variance for direct labor? 3. Who is generally responsible for each variance? 4. Interpret the variances. Direct materials Direct labor Actual variable manufacturing overhead Purchased 15,580 pounds at a cost of $6.40 per pound; used 14,880 pounds to produce 1,200 pots .Worked 5.3 hours per flower pot (6,360 total DLH) at a cost of $20.00 per hour $3.20 per direct labor hour for total actual variable ....manufacturing overhead of $20,352 Actual fixed manufacturing overhead Standard fixed manufacturing overhead allocated based on actual production $55,400 $60,000 Standard Price and Volume Chic Design is a manufacturer of large flower pots for urban settings. The company has these standards: (Click the icon to view the standards.) (Click the icon to view the actual results.) Read the requirements. Direct materials (resin) Direct labor .12 pounds per pot at a cost of $6.00 per pound .5.0 hours per pot at a cost of $21.00 per hour Standard variable manufacturing overhead rate ....$3.00 per direct labor hour Budgeted fixed manufacturing overhead Standard fixed MOH rate $56,000 $10.00 per direct labor hour (DLH) Requirement 1. Compute the direct labor rate variance and the direct labor efficiency variance. (Enter the variances as positive numbers. Enter the currency amounts in the formulas to the nearest cent, then round the final variance amounts to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U). Abbreviations used: DL = Direct labor) Begin with the direct labor rate variance. First determine the formula for the rate variance, then compute the rate variance for direct labor. Actual Results Chic Design allocated fixed manufacturing overhead to production based on standard direct labor hours. Last month, the company reported the following actual results for the production of 1,200 flower pots: - =DL rate variance
Requirements 1. Compute the direct labor rate variance and the direct labor efficiency variance. 2. What is the total variance for direct labor? 3. Who is generally responsible for each variance? 4. Interpret the variances. Direct materials Direct labor Actual variable manufacturing overhead Purchased 15,580 pounds at a cost of $6.40 per pound; used 14,880 pounds to produce 1,200 pots .Worked 5.3 hours per flower pot (6,360 total DLH) at a cost of $20.00 per hour $3.20 per direct labor hour for total actual variable ....manufacturing overhead of $20,352 Actual fixed manufacturing overhead Standard fixed manufacturing overhead allocated based on actual production $55,400 $60,000 Standard Price and Volume Chic Design is a manufacturer of large flower pots for urban settings. The company has these standards: (Click the icon to view the standards.) (Click the icon to view the actual results.) Read the requirements. Direct materials (resin) Direct labor .12 pounds per pot at a cost of $6.00 per pound .5.0 hours per pot at a cost of $21.00 per hour Standard variable manufacturing overhead rate ....$3.00 per direct labor hour Budgeted fixed manufacturing overhead Standard fixed MOH rate $56,000 $10.00 per direct labor hour (DLH) Requirement 1. Compute the direct labor rate variance and the direct labor efficiency variance. (Enter the variances as positive numbers. Enter the currency amounts in the formulas to the nearest cent, then round the final variance amounts to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U). Abbreviations used: DL = Direct labor) Begin with the direct labor rate variance. First determine the formula for the rate variance, then compute the rate variance for direct labor. Actual Results Chic Design allocated fixed manufacturing overhead to production based on standard direct labor hours. Last month, the company reported the following actual results for the production of 1,200 flower pots: - =DL rate variance
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
Section: Chapter Questions
Problem 1PB: Direct materials and direct labor variance analysis Lenni Clothing Co. manufactures clothing in a...
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