Aaha Inc. produces premium protective automotive covers. The direct materials an
ID: 2509344 • Letter: A
Question
Aaha Inc. produces premium protective automotive covers. The direct materials and direct labour standards for one car cover are as follows:
Compute all direct labour cost variances for September. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
Calculate the total under- or overapplied overhead. Show all the variances calculated and indicate if each variance is favourable or unfavourable. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculations and round "Fixed overhead volume variance and total variance" to 2 decimal places.)
Aaha Inc. produces premium protective automotive covers. The direct materials and direct labour standards for one car cover are as follows:
Explanation / Answer
Solution:
Part 2 --- Direct labor cost variance
Labor Rate Variance
Actual Hourly Rate (AHR) ($11,700 / 585)
$20.00
Per Hour
Standard Hourly Rate (SHR)
$20.00
Per Hour
Variance or Difference in Rate
$0.0000
Per Hour
x Actual Labor Hours worked
160000
Hours
Labor Rate Variance
$0
None
Labor Quantity / Efficiency Variance
Standard Hours Allowed for actual production:
Actual Production
2700
Cover
x Allowed Standard Hours Per Unit ($7 std cost / $20 per hour)
0.35
hours
Total Standard Hours Allowed for actual production (SHAP)
945
hours
Actual Labor Hours Worked (AH)
585
hours
Variance or Difference in Hours
360
hours
x Standard Hourly Rate (SHR)
$20.00
per hour
Labor Efficiency Variance
$7,200
Favorable
Direct Labor Cost variance = $7,200 Favorable
Labor Rate Variance
Actual Hourly Rate (AHR) ($11,700 / 585)
$20.00
Per Hour
Standard Hourly Rate (SHR)
$20.00
Per Hour
Variance or Difference in Rate
$0.0000
Per Hour
x Actual Labor Hours worked
160000
Hours
Labor Rate Variance
$0
None
Labor Quantity / Efficiency Variance
Standard Hours Allowed for actual production:
Actual Production
2700
Cover
x Allowed Standard Hours Per Unit ($7 std cost / $20 per hour)
0.35
hours
Total Standard Hours Allowed for actual production (SHAP)
945
hours
Actual Labor Hours Worked (AH)
585
hours
Variance or Difference in Hours
360
hours
x Standard Hourly Rate (SHR)
$20.00
per hour
Labor Efficiency Variance
$7,200
Favorable
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