Question

In: Accounting

erde Company produces wheels for bicycles. During the year, 653,000 wheels were produced. The actual labor...

erde Company produces wheels for bicycles. During the year, 653,000 wheels were produced. The actual labor used was 364,000 hours at $9.60 per hour. Verde has the following labor standards: 1) $10.10 per hour; 2) 0.45 hour per wheel.

Required:

1. Compute the labor rate variance.
$ Favorable

2. Compute the labor efficiency variance.
$ Unfavorable

Solutions

Expert Solution

Answer)

Calculation of Labor rate variance

Labor rate variance = (Standard rate per labor hour – Actual rate per labor hour) X Actual labor hours consumed

                                        = ($ 10.10 -$ 9.60) X 364,000 labor hours

                                        = $ 182,000 (Favorable)

Calculation of Labor efficiency variance

Labor efficiency variance = (Standard labor hours for Actual output – Actual labor hour) X standard rate per labor hour

                                        = (293,850 labor hours -364,000 hours) X $ 10.10 per hour

                                        = $ 708,515 (Unfavorable)

Working Note:

Calculation of Standard labor hours for actual output

Standard labor hours for actual output = Standard labor hours per unit of output X number of units produced

                                                                               = 0.45 hours per wheel X 653,000 wheels

                                                                               = 293,850 labor hours

    

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Alard Company produces blenders and coffee makers. During the past year, the company produced and sold...
Alard Company produces blenders and coffee makers. During the past year, the company produced and sold 65,000 blenders and 75,000 coffee makers. Fixed costs for Alard totaled $340,000, of which $184,000 can be avoided if the blenders are not produced and $142,500 can be avoided if the coffee makers are not produced. Revenue and variable cost information follows: Blenders Coffee Makers Selling price per appliance $24 $29 Variable expenses per appliance 18 27 Required: 1. Prepare segmented income statements. Separate...
Amber Company produces iron table and chair sets. During October, Amber’s costs were as follows: Actual...
Amber Company produces iron table and chair sets. During October, Amber’s costs were as follows: Actual purchase price $ 3.20 per lb. Actual direct labor rate $ 8.40 per hour Standard purchase price $ 3.00 per lb. Standard quantity for sets produced 1,060,000 lbs. Standard direct labor hours allowed 21,000 Actual quantity purchased in October 1,365,000 lbs. Actual direct labor hours 19,000 Actual quantity used in October 1,090,000 lbs. Direct labor rate variance $6,460 F Required: 1. Calculate the total...
Amber Company produces iron table and chair sets. During October, Amber’s costs were as follows: Actual...
Amber Company produces iron table and chair sets. During October, Amber’s costs were as follows: Actual purchase price $ 1.80 per lb. Actual direct labor rate $ 7.00 per hour Standard purchase price $ 1.60 per lb. Standard quantity for sets produced 920,000 lbs. Standard direct labor hours allowed 15,000 Actual quantity purchased in October 1,065,000 lbs. Actual direct labor hours 7,000 Actual quantity used in October 950,000 lbs. Direct labor rate variance $5,000 F Required: a. Calculate the total...
Direct Labor Variances The Freedom Clothes Company produced 15,000 units during June of the current year....
Direct Labor Variances The Freedom Clothes Company produced 15,000 units during June of the current year. The Cutting Department used 2,900 direct labor hours at an actual rate of $14.4 per hour. The Sewing Department used 4,800 direct labor hours at an actual rate of $14.1 per hour. Assume there were no work in process inventories in either department at the beginning or end of the month. The standard labor rate is $14.3. The standard labor time for the Cutting...
Davis Company produced 159,000 sport jackets during 2015 and 530,000 direct manufacturing labor hours were used...
Davis Company produced 159,000 sport jackets during 2015 and 530,000 direct manufacturing labor hours were used at $3 per hour. The conversion costs were $1.20 per jackets produced. What is the total factor productivity for Davis Company? a. 2.500 units of output per dollar b. 0.300 units of outpur per dollar c. 0.298 units of output per dollar d. 0.089 units of output per dollar
Langdon Company produced 9,600 units during the past year, but only 8,400 of the units were...
Langdon Company produced 9,600 units during the past year, but only 8,400 of the units were sold. The following additional information is also available. Direct materials used $76,100 Direct labor incurred $32,000 Variable manufacturing overhead $21,500 Fixed manufacturing overhead $38,400 Fixed selling and administrative expenses $70,000 Variable selling and administrative expenses $10,000 There was no work in process inventory at the beginning and end of the year, nor did Langdon have any beginning finished goods inventory. What would be Langdon...
Armstrong Company produces a variety of bicycles. One of its plants produces two bicycles: a mountain...
Armstrong Company produces a variety of bicycles. One of its plants produces two bicycles: a mountain model and a racing model. At the beginning of the year, the following data were prepared for this plant: Mountain Racing Quantity 250,000 125,000 Selling Price $1,200 $1,000 Unit Prime Cost $ 400 $ 500 In addition, the following information was provided so that overhead costs could be assigned to each product: Activity Name Activity Driver Activity Cost Racing Mountain Machining Machine hours $20,000,000...
A company produces precision 1-meter (1000 mm) rulers. The actual distribution of lengths of rulers produced...
A company produces precision 1-meter (1000 mm) rulers. The actual distribution of lengths of rulers produced by this company is approximately normal with mean 1000 and standard deviation 0.02mm. (a) Approximately 16% of the rulers are less than what length?   (b) Suppose you take a random sample of 5 rulers. What is the probability that the average of the sample is greater than 1000.01 mm?  
Ash Company incurred direct materials costs of $1,600,000 during the year. Direct Labor costs were $600,000....
Ash Company incurred direct materials costs of $1,600,000 during the year. Direct Labor costs were $600,000. Manufacturing overhead was applied at the rate of 70% of direct labor costs. What were Ash Company’s total manufacturing costs for the year? Superior Painting Company has the following production data for January: · Beginning work in process, 0 units · Units transferred out, 35,000 · Units in ending work in process, 10,000, which are 45% complete for conversion costs Materials are added only...
The following costs were incurred for the single product produced during the first year of operations...
The following costs were incurred for the single product produced during the first year of operations for the Fairfax Manufacturing Company: Variable costs per unit: Manufacturing: Direct materials $      11 Direct labor $       5 Variable manufacturing overhead $       2 Variable selling and administrative $       2 Fixed costs per year: Fixed manufacturing overhead $ 350,000 Fixed selling and administrative $ 260,000 During the year, the company produced 35,000 units and sold 25,000 units. The selling price of the company’s product is $46 per unit. Required:   ...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT