The accountant for Barry Ltd compares each month's actual results with a monthly plan. The standarddirect labour rates and the standard hours allowed, given the actual output in April, are shown in thefollowing schedule:Standard direct labour rate per hourStandard direct labour hours allowed,given April output$26.00$22.00Labour class IIl1,000Labour class II1,000Labour class I$12.001,000A new union contract negotiated in March resulted in actual wage rates that differed from thestandard rates. The actual direct labour hours worked and the actual direct labour rates per hour forApril were as follows.Actual direct labour rate per hourActual direct labour hoursLabour class II$28.001,100Labour class II$23.001,300Labour class I$14.00750Required:a) Calculate the following variances for April, indicating whether each is favourable or unfavourable:i direct labour rate variance for each labour class.ii direct labour efficiency variance for each labour class.b) Discuss two advantages and two disadvantages of a standard costing system in which the standarddirect labour rates per hour are not changed during the year to reflect events such as a new labourcontract.

A variance is the difference between actual results and the budget or standard.

Answered: The accountant for Barry Ltd compares…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 7PB: Marymount Company makes one product. In the month of April, it made 3,500 units. Workers were paid...

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