Kalina\'s Doll Company produces handmade dolls. The standard amount of time spen

Question

Kalina's Doll Company produces handmade dolls. The standard amount of time spent on each doll is 1.50 hours. The standard cost of labor is $7.73 per hour. The company planned to make 8,000 dolls during the year but actually used 12,500 hours of labor to make 9,200 dolls. The payroll amounted to $99,500 Required: a. Should labor variances be based on the planned volume of 8,000 dolls or the actual volume of 9.200 dolls? O The actual volume of 9,200 dolls O The planned volume of 8,000 dolls b. Prepare a table that shows the standard labor price, the actual labor price, the standard labor hours, and the actual labor hours. (Round "Standard price and Actual price" to 2 decimal places.) Labor Variance Information Table Standard labor price Actual price per hour Standard hours for flexible budget Actual hours used Amounts Hrs. Hrs.

Explanation / Answer

a) Labor variances will be based on the actual volume of 9,200 dolls

b)

c) Labor Price variance = Actual hours x (Actual rate - Standard Rate)

= 12500 x (7.96 - 7.73) = $2,875 (Unfavorable

d) Labor Usage variance = Standard Rate x (Actual hours - Standard hours for actual output)

= $7.73 x (12500 - (1.5 x 9200) = $10,050 (Favorable)

Standard labor price 7.73 Actual price per hour ($99,500 / 12500 hours) 7.96 Standard hours for flexible budget (1.5 x 8000) 12000 hrs Actual hours used 12500 hrs

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