Direct labor variances: Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories: Direct labor Rate variance : this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows: Direct labor rate variance = ( Actual rate – Standard rate ) × Actual hours Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows: Direct labor efficiency variance = ( Actual hours – Standard hours ) × Standard rate Direct labor cost or spending variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows: Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance Or, Direct Labor cost variance = Actual Labor cost − Standard Labor Cost To calculate: Direct labor rate, efficiency, and spending variances.

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Answer 1

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 9, Problem 5.2GBP

To determine

Concept introduction:

Direct labor variances:

Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:

Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:

Direct labor rate variance = (Actual rate – Standard rate) ×Actual hours

Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:

Direct labor efficiency variance = (Actual hours – Standard hours)×Standard rate

Direct labor cost or spending variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows:

Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance Or, Direct Labor cost variance = Actual Labor cost − Standard Labor Cost

To calculate:

Direct labor rate, efficiency, and spending variances.

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Required Information [The following information applies to the questions displayed below.] The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct materials, direct labor, and manufacturing (factory) overhead. The firm traces all direct costs to products, and it assigns overhead cost to products based on direct labor hours. Required: 1. Compute the factory overhead flexible-budget varlance, the factory overhead spending varlance, and the efficiency variance for variable factory overhead for March and state whether each variance is favorable (F) or unfavorable (U). 2. Provide the appropriate journal entry to record the variable overhead spending variance and a second entry to record the variable overhead efficiency variance for March. Assume that the company uses a single account, Factory Overhead, to record overhead costs. No The company budgeted $11,925 variable factory overhead cost, $96,750 for fixed factory overhead cost and…

Calculating the Variable Overhead Spending and Efficiency Variances Standish Company manufactures consumer products and provided the following information for the month of February:

Sharp Company manufactures a product for which the following standards have been set: Standard Quantity Standard Price Standard or Hours or Rate Cost $5 per foot ? per hour Direct materials 3 feet $ 15 Direct labor ? hours ? During March, the company purchased direct materials at a cost of $45,375, all of which were used in the production of 2,350 units of product. In addition, 4,800 direct labor-hours were worked on the product during the month. The cost of this labor time was $50,400. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $ 2,250 U $ 3,400 U $ 1,000 U Required: 1. For direct materials: a. Compute the actual cost per foot of materials for March. b. Compute the price variance and the spending variance. 2. For direct labor: a. Compute the standard direct labor rate per hour. b. Compute the standard hours allowed for the month's production. c. Compute the standard hours allowed per unit of…

Answer 2

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 9, Problem 5.2GBP

To determine

Concept introduction:

Direct labor variances:

Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:

Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:

Direct labor rate variance = (Actual rate – Standard rate) ×Actual hours

Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:

Direct labor efficiency variance = (Actual hours – Standard hours)×Standard rate

Direct labor cost or spending variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows:

Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance Or, Direct Labor cost variance = Actual Labor cost − Standard Labor Cost

To calculate:

Direct labor rate, efficiency, and spending variances.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 9, Problem 5.2GBP

To determine

Concept introduction:

Direct labor variances:

Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:

Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:

Direct labor rate variance = (Actual rate – Standard rate) ×Actual hours

Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:

Direct labor efficiency variance = (Actual hours – Standard hours)×Standard rate

Direct labor cost or spending variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows:

Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance Or, Direct Labor cost variance = Actual Labor cost − Standard Labor Cost

To calculate:

Direct labor rate, efficiency, and spending variances.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

Chapter 9, Problem 5.2GBP

To determine