Hollowell Audio, Inc., manufactures military-specification compact discs. The co

Question

Hollowell Audio, Inc., manufactures military-specification compact discs. The company uses standards to control its costs. The labor standards that have been set for one disc are as follows:

     During July, 9,430 hours of direct labor time were required to make 19,400 discs. The direct labor cost totaled $49,036 for the month.

According to the standards, what direct labor cost should have been incurred to make the 19,400 discs? (Do not round intermediate calculations. Omit the "$" sign in your response.)

By how much does this differ from the cost that was incurred? (Input the amount as a positive value. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Break down the difference in cost from (1) above into a labor rate variance and a labor efficiency variance. (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

The budgeted variable manufacturing overhead rate is $4.3 per direct labor-hour. During July, the company incurred $47,150 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month. (Input all amounts as positive values. Do not round intermediate calculations. Round your final answers to the nearest dollar amount. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Hollowell Audio, Inc., manufactures military-specification compact discs. The company uses standards to control its costs. The labor standards that have been set for one disc are as follows:

Explanation / Answer

Labor Rate Variance = AH (AR SR) 8,500 hours ($5.80 per hour* $6.00 per hour) = $1,700 F *$49,300/ 8,500 hours = $5.80 per hour

Labor Efficiency Variance = SR (AH SH) $6 per hour (8,500 hours 8,000 hours) = $3,000 U

Actual Hours of Input, at the Actual Rate (AH AR) $39,100

Actual Hours of Input, at the Standard Rate (AH SR) 8,500 hours $4 per hour = $34,000

Standard Hours Allowed for Output, at the Standard Rate (SH SR) 8,000 hours $4 per hour = $32,000

Spending Variance, $5,100 U Efficiency Variance, $2,000 U

Total Variance, $7,100 U

Variable Overhead Spending Variance = AH (AR SR) 8,500 hours ($4.60 per hour* $4.00 per hour) = $5,100 U *$39,100 8,500 hours = $4.60 per hour Variable

Overhead Efficiency Variance = SR (AH SH) $4 per hour (8,500 hours 8,000 hours) = $2,000 U

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.