Actual Standarod Total Job Number A257 A258 A259 A260 Total variance Hours Costs

Question

Actual Standarod Total Job Number A257 A258 A259 A260 Total variance Hours Costs Hours Costs Variance 221 $4,420 225 $4,500 80F 850 U 180 U 112 F $838 U 450 300 116 9,450 430 6,180 300 2,088 110 8,600 6,000 2,200 Analysis reveals that Job A257 was a repeat job. Job A258 was a rush order that required overtime work at premium rates of pay. Job A259 required a more experienced replace- ment worker on one shift. Work on Job A260 was done for one day by a new trainee when a regular worker was absent. Instructions Prepare a report for the plant supervisor on direct labor cost variances for March. The report should have columns for (1) Job No., (2) Actual Hours, (3) Standard Hours, (4) Quantity Variance, (5) Actual Rate, (6) Standard Rate, (7) Price Variance, and (8) Explanation.

Explanation / Answer

Job. No. Actual Hrs. Std. Hrs Quantity Actual rate Standard rate Price Actual Standard Variance (G / A) (H / B) Variance Cost Cost ( B - A) x E (E - D) x A (A) (B) (C) (D) (E) (F) (G) (H) A257 221 225 80 20.00 20.00 0 4420 4500 A258 450 430 -400 21.00 20.00 -450 9450 8600 A259 300 300 0 20.60 20.00 -180 6180 6000 A260 116 110 -120 18.00 20.00 232 2088 2200 1. Job. A257 has a favourable quantity variance and no rate variance. This can be explained by the      fact that it is a repeat order and this has resulted in lower actual hours than the standard hours      as the employees will become more familiar with the job as they repeat the same type of work. 2. Since Job.258 was a rush order that required overtime at premium pay , this job has unfavourable      variances in both quantity and price. 3. Since A 259 required a more experienced replacement worker in one shift,     the rate variance is unfavourable and there is no quantity variance. 4. Since A260 was done by a trainee worker , in place of regular worker, the rate variance is favourable      as the wage for trainee worker will be lower than regular worer. This also has resulted in an     unfavourable quantity variance as the trainee worker needs more time than a regular worker.

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