Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 10, Problem 41P
The director of cost management for Portland Instrument Corporation compares each month’s actual results with a monthly plan. The standard direct-labor rates for the year just ended and the standard hours allowed, given the actual output in April, are shown in the following schedule.
A new union contract negotiated in March resulted in actual wage rates that differed from the standard rates. The actual direct-labor hours worked and the actual direct-labor rates per hour experienced for the month of April were as follows:
Required:
- 1. Compute the following variances for April. Indicate whether each is favorable or unfavorable.
- a. Direct-labor rate variance for each labor class.
- b. Direct-labor efficiency variance for each labor class.
- 2. Discuss the advantages and disadvantages of a standard-costing system in which the standard direct-labor rates are not changed during the year to reflect such events as a new labor contract.
- 3. Build a spreadsheet: Construct an Excel spreadsheet to solve requirements (1) above. Show how the solution will change if the following information changes: the actual labor rates were $16.95, $15.10, and $10.60 for labor classes III, II, and I, respectively.
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The accountant for Barry Ltd compares each month’s actual results with a monthly plan. The standarddirect labour rates and the standard hours allowed, given the actual output in April, are shown in thefollowing schedule:
standard direct labour per hour
standard direct labour hours allowed given april output
labour class III
$26
1000
labour class II
$22
1000
labour class I
$12
1000
A new union contract negotiated in March resulted in actual wage rates that differed from thestandard rates. The actual direct labour hours worked and the actual direct labour rates per hour forApril were as follows.
actual direct labour per hour
actual direct labour hour
labour class 3
$28
110
labour class 2
$23
130
labour class 1
$14
750
Required:a) Calculate the following variances for April, indicating whether each is favourable or unfavourable:i direct labour rate variance for each labour class. ii direct labour efficiency variance for each labour class. b) Discuss two…
The accountant for Barry Ltd compares each month’s actual results with a monthly plan. The standard direct labour rates and the standard hours allowed, given the actual output in April, are shown in the following schedule:
Standard direct labour rate per hour
Standard direct labour hours allowed,
given April output
Labour class III
$26.00
1,000
Labour class II
$22.00
1,000
Labour class I
$12.00
1,000
A new union contract negotiated in March resulted in actual wage rates that differed from the standard rates. The actual direct labour hours worked and the actual direct labour rates per hour for April were as follows.
Actual direct labour rate per hour
Actual direct labour hours
Labour class III
$28.00
1,100
Labour class II
$23.00
1,300
Labour class I
$14.00
750
Required:
Calculate the following variances for April, indicating whether each is…
The accountant for Barry Ltd compares each month’s actual results with a monthly plan. The standarddirect labor rates and the standard hours allowed, given the actual output in April, are shown in thefollowing schedule:Standard direct labor rate per hour Standard direct labor hours allowed,given April outputLabour class III $26.00 1,000Labour class II $22.00 1,000Labour class I $12.00 1,000A new union contract negotiated in March resulted in actual wage rates that differed from thestandard rates. The actual direct labor hours worked and the actual direct labor rates per hour forApril was as follows.Actual direct labor rate per hour Actual direct labor hoursLabour class III $28.00 1,100Labour class II $23.00 1,300Labour class I $14.00 750Required:a) Calculate the following variances for April, indicating whether each is favorable or unfavorable:I direct labor rate variance for each labor class.ii direct labor efficiency variance for each labor class.b) Discuss two advantages and two…
Chapter 10 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 10 - Prob. 1RQCh. 10 - What is meant by the phrase management by...Ch. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - What is the interpretation of the direct-material...Ch. 10 - What manager is usually in the best position to...Ch. 10 - What is the interpretation of the direct-material...Ch. 10 - Prob. 10RQ
Ch. 10 - Prob. 11RQCh. 10 - What is the interpretation of the direct-labor...Ch. 10 - What manager is generally in the best position to...Ch. 10 - What is the interpretation of the direct-labor...Ch. 10 - What manager is generally in the best position to...Ch. 10 - Prob. 16RQCh. 10 - Describe five factors that managers often consider...Ch. 10 - Discuss several ways in which standard-costing...Ch. 10 - Describe how standard costs are used for product...Ch. 10 - Prob. 20RQCh. 10 - Prob. 21RQCh. 10 - Saskatewan Can Company manufactures recyclable...Ch. 10 - Refer to the data in the preceding exercise. Use...Ch. 10 - Cayuga Hardwoods produces handcrafted jewelry...Ch. 10 - During June, Danby Companys material purchases...Ch. 10 - Refer to the data in the preceding exercise. Draw...Ch. 10 - The director of cost management for Odessa Company...Ch. 10 - Due to evaporation during production, Plano...Ch. 10 - Prob. 30ECh. 10 - Refer to the data in Exercise 1022, regarding...Ch. 10 - Saskatewan Can Company manufactures recyclable...Ch. 10 - New Jersey Valve Company manufactured 7,800 units...Ch. 10 - Prob. 34PCh. 10 - During May, Joliet Fabrics Corporation...Ch. 10 - Sal Amato operates a residential landscaping...Ch. 10 - Santa Rosa Industries uses a standard-costing...Ch. 10 - The following data pertain to Colgate-Palmolives...Ch. 10 - Orion Corporation has established the following...Ch. 10 - Associated Media Graphics (AMG) is a rapidly...Ch. 10 - The director of cost management for Portland...Ch. 10 - Ogwood Companys Johnstown Division is a small...Ch. 10 - Quincy Farms produces items made from local farm...Ch. 10 - Schiffer Corporation manufactures agricultural...Ch. 10 - Aqua float Corporation manufactures rafts for use...Ch. 10 - Rocky Mountain Camping Equipment, Inc. has...Ch. 10 - Springsteen Company manufactures guitars. The...Ch. 10 - Springsteen Company manufactures guitars. The...Ch. 10 - European Styles, Inc. manufactures womens blouses...Ch. 10 - MacGyver Corporation manufactures a product called...
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