employees received an unexpected rate increase during the period. Work in Proces
ID: 2480194 • Letter: E
Question
employees received an unexpected rate increase during the period.
Work in Process valued at $25,000 was completed and transferred to Finished Goods.
the total labor variance was $800, unfavorable.
more labor time was required to complete the output of the period than was allowed at standard.
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Thomasson Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $36,270 per month plus $2,064 per flight plus $1 per passenger. The company expected its activity in April to be 87 flights and 237 passengers, but the actual activity was 86 flights and 242 passengers. The actual cost for plane operating costs in April was $211,010. The activity variance for plane operating costs in April would be closest to:
$5,065 F
$2,059 U
$2,059 F
$5,065 U
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The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
$4,452 U
$4,200 F
$4,452 F
$4,200 U
Thomasson Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $36,270 per month plus $2,064 per flight plus $1 per passenger. The company expected its activity in April to be 87 flights and 237 passengers, but the actual activity was 86 flights and 242 passengers. The actual cost for plane operating costs in April was $211,010. The activity variance for plane operating costs in April would be closest to:
Explanation / Answer
Planning budget($36,270+$2064*87+$1*237)= $216,075
Flexible budget ($36,270+$2064*86+$1*242)=$214,016
Activity variance = 2,059
Because the flexible budget is less than the planning budget, the variance is favorable (F)
SH = 6,100 units × 0.8 hours per unit = 4,880 hours
Labor efficiency variance = (AH SH) SR
= (4,600 hours – 4,880 hours) $15 per hour
= (280 hours) $15 per hour = $4,200 F
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