Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
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Chapter 23, Problem 23.13EX
Direct labor variances for a service company
Hit-n-Run Food Trucks, Inc. owns and operates food trucks (mobile kitchens) throughout the West Coast. The company’s employees have varying wage levels depending on their experience and length of time with the company. Employees work eight-hour shifts and are assigned to a truck each day based on labor needs to support the daily menu. One of the trucks, Jose O’Brien’s Mobile Fiesta, specializes in Irish-Mexican fusion cuisine. The truck offers a single menu item that changes daily. On November 11, the truck prepared 200 of its most popular item, the Irish Breakfast Enchilada. The following data are available for that day:
| Quantity of direct labor used | |
| (3 employees, working 8-hour shifts) | 24 hrs. |
| Actual rate for direct labor | $15.00 per hr. |
| Standard direct labor per meal | 0.1 hr. |
| Standard rate for direct labor | $15.50 per hr. |
a. Determine the direct labor rate variance, the direct labor time variance, and the total direct labor cost variance.
b. Discuss what might have caused these variances.
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customers. The company has three employees, each assigned to specific
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segment. The company incurs variable costs that include the employees' wages,
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Paradise Pool Cleaning Service Income Statement
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Benton
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McMillian, 60; and Faulker, 70. Compute the service…
Hit-n-Run Food Trucks, Inc. owns and operates food trucks (mobile kitchens) throughout the west coast. The company’s employees have varying wage levels depending on their experience and length of time with the company. Employees work 8-hour shifts and are assigned to a truck each day based on labor needs to support the daily menu. One of its trucks, Jose O’Brien’s Mobile Fiesta, specializes in Irish-Mexican fusion cuisine. The truck offers a single menu item that changes daily. On November 11, the truck prepared 200 of its most popular item, the Irish Breakfast Enchilada. The following data are available for that day:
Cost Driver
Amount
Quantity of direct labor used
(3 employees, working 8 hour shifts)
24 hrs.
Actual rate for direct labor
$15.00 per hr.
Standard direct labor per meal
.1 hr.
Standard rate for direct labor
$15.50 per hr.
Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance.
In…
Chapter 23 Solutions
Accounting
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