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

Question

Vernon'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 $7.69 per hour. The company planned to make 8,100 dolls during the year but actually used 12,750 hours of labor to make 9,200 dolls. The payroll amounted to $102,893. Required a. Should labor varlances be based on the planned volume of 8,100 dolls or the actual volume of 9,200 dolls? b. Prepare a table that shows the standard labor price, the actual labor price, the standard labor hours, and the actual labor hours. c. Compute the labor price varlance and indicate whether It is favorable (F) or unfavorable (U) d. Compute the labor usage varlance and indicate whether it is favorable (F) or unfavorable (U) Complete this question by entering your answers in the tabs below. Req A Should labor variances be based on the planned volume of 8,100 dolls or the actual volume of 9,200 dolls? Labor variances should be based on the Req B Req C and D Req A Req B >

Explanation / Answer

a) Labour variances be based on actual volume of 9,200 Dolls b) Standard Actual Particulars Hours Rate amount Hours Rate amount Labour            13,800.00                  7.6900         106,122.00            12,750.00                      8.07         102,893.00 Actual output              9,200.00 Labour hours required = 9200 * 1.50            13,800.00 Standard labour price                      7.69 Actual price                      8.07 Standard hours for flexible budget            13,800.00 Actual hours used            12,750.00 c) DLPV= (SR-AR)AH DLPV= (7.69 - 8.07)12750 DLRV= 4,845 Unfavourabe d) DLUV = (SH-AH)SR DLUV = (13800 - 12750)7.69 DLUV = 8,074 Favourab;e

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