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

1a - 20,000 x 2.40 = 48,000 Stnd Labor cost

1b - Actual 49,300 vs 48,000 = 1,300 Unfav

2 -
Rate Variance - 49,300 / 2,125 = 23.20 vs 24.00 Stnd = .80 Fav x 2,125 = 1,700 Fav
Efficiency - 2,125 actual hrs vs 2,000 stnd hrs = 125 x 24.00 = 3,000 Unfav
Total 1,700 Fav - 3,000 Unfav = 1,300 Unfav

3 -
Rate - Actual 39,100 / 2,125 = 18.40 per hr vs 16.00 Stnd = 2.40 x 2,125 = 5,100 Unfav
Efficiency - Actual 2,125 vs 2,000 stnd hrs = 125 x 16 = 2,000 Unfav
Total 7,100 unfav: Actual 39,100 vs Stnd 32,000(16 x 2,000)

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