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, 9,230 hours of direct labor time were required to make 19,400 discs. The direct labor cost totaled $48,919 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.)

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).)

Break down the difference in cost from (1) above into a labor efficiency variance and a labor rate 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).)

The budgeted variable manufacturing overhead rate is $4.50 per direct labor-hour. During July, the company incurred $46,150 in variable manufacturing overhead cost. Compute the variable overhead efficiency and rate 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).)

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

Ans-

1a) Total standard direct labor cost=Total disc made*Standand cost per disc

=19400*2.43

=$47142

b)Spending variance =Standand direct labor cost-Actual direct labor cost

=47142-48919

=$1777 (U)

2)Labor efficiency variance =(Actual hours - Standard hours) x Standard rate

Standard hours=Standard hours per disc*atual output

=(27*19400)/60

=$8730

Labor efficiency variance =(9230-8730)5.4

=2700 (F)

Labor rate variance=(Actual rate - Standard rate) x Actual hours worked

  Actual cost per unit =Actual Direct labor cost/actual output

=48919/19400

=$2.52

Actual hrs per unir=60/(19400/9230)

=29 min

Actual rate per hrs=2.52*60/29

=$5.21

Labor rate variance=(5.21-5.4)*9230

=$1753.7 (U)

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

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