Question

Textron Manufacturing Inc. assembles industrial testing instruments in two departments, assembly and testing. Operating data for the current and prior year follow:

	Current Year				Prior Year
Assembly department
Actual direct labor hours per instrument		25				34
Actual wage rate per hour	$	46			$	40
Standard direct labor hours per instrument		26				33
Standard wage rate per hour	$	45			$	38
Testing department
Actual direct labor hours per instrument		15				17
Actual wage rate per hour	$	34			$	30
Standard direct labor hours per instrument		16				23
Standard wage rate per hour	$	37			$	31

The firm assembled and tested 30,000 instruments in both years.

Required:

1. Calculate the direct labor rate and efficiency variances for both departments in both years.

2. Calculate the direct labor partial operational productivity ratio for both departments in both years. (Round your answers to 4 decimal places.)

3. Calculate the partial financial productivity ratio for both departments in both years. (Round your answers to 4 decimal places.)

		Assembly Department		Testing Department
1	Rate variance (Prior year)		F/U		F/U
	Rate variance (Current year)		F/U		F/U
	Efficiency variance (Prior year)		F/U		F/U
	Efficiency variance (Current year)		F/U		F/U
2	Partial operational productivity ratio (Prior year)		F/U		F/U
	Partial operational productivity ratio (Current year)		F/U		F/U
3	Partial financial productivity ratio (Prior year)		F/U		F/U
	Partial financial productivity ratio (Current year)		F/U		F/U

Answer 1

		Assembly Department	Testing Department
1	Rate Variance (prior year)	$2,040,000 U	$510,000 F
	Rate Variance (current year)	$750,000 U	$1,350,000 F
	Efficiency variance (prior year)	$1,140,000 U	$5,580,000 F
	Efficiency variance (current year)	$1,350,000 F	$1,110,000 F
2	Partial operational productivity ratio (prior year)	34 Hours	17 Hours
	Partial operational productivity ratio (Current year)	25 Hours	15 Hours
3	Partial financial productivity ratio (prior year)
	Partial financial productivity ratio (Current year)

Calculations :-

Labor Rate Variance = (Standard Rate - Actual Rate) * Actual hours Worked

For Prior Year of Testing Department = ($31 - $30) * (17 * 30,000) = 510,000 F

For Current Year of Testing Department = ($37 - $34) * (15 * 30,000) = 1,350,000 F

Same calculations as above for Assembly Department

Labor Efficiency Variance = ( Standard Time - Productive Time ) * Standard Rate

For Prior Year of Testing Department = {(23 - 17) * 30,000 }* 31 = 5,580,000 F

For Current Year of Testing Department = {(16-15) * 30,000 } * 37 = 1,110,000 F

There is no such information given to calculate partial financial productivity ratio