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Safari File Edit View History Bookmarks Develop Window Help ezto.mheducation.com 4.00 points Problem 9-110 [LO 9-4] Delmar Inc. uses a standard cost system. Labor standards are 2.0 hours per widget at $9.00 per hour. During August Delmar Inc. paid its workers $150,550 for 16,500 hours. Delmar Inc. produced 8,600 widgets during August a. Calculate the direct labor rate variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable","Unfavorable", or "None" for no effect (i.e., zero variance).) b. Calculate the direct labor efficiency variance. (Indicate the effect of variance by selecting "Favorable", Unfavorable or Nonefar no effect (zero variancel- 19Explanation / Answer
CALCULATION OF THE STANDARD COST PER UNIT Standard Time Standard Rate Standard Cost per unit 2 $ 9.00 $ 18.00 Hrs Per Hours Calculation of Standard Cost for 8600 units Standard Time Standard Rate Standard Cost 17200 $ 9.00 $ 1,54,800.00 Hrs (8600 X2) Per Hours Calculation of Actual Cost for 8600 Units Actual Time Standard Rate Actual Cost 16500 $ 9.12 $ 1,50,550.00 Per Hours Labour Cost Variance = Standard Cost of Labour - Actual Cost of Labour Labour Cost Variance = $ 1,54,800.00 '-' $ 1,50,550.00 Labour Cost Variance = $ 4,250.00 (favorable) Labour Rate Variance = (Actual Rate - Standard Rate) X Actual Hours Labour Rate Variance = ( $ 9.12 '-' $ 9.00 ) X $ 16,500.00 Labour Rate Variance = $ 0.12 X $ 16,500.00 Labour Rate Variance = 2050 (Unfavorable) Labour Efficiency Variance = (Actual Hours - Standard Hours ) X Standard Rate Labour Efficiency Variance = ( 16,500.00 '-' 17,200.00 ) X $ 9.00 Labour Efficiency Variance = $ 700.00 X $ 9.00 Labour Efficiency Variance = 6300 (favorable)
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