Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 11, Problem 11.37BE
Calculate and explain direct labor variances (Learning Objective 3)
Russell Tax Services prepares tax returns for senior citizens. The standard in terms of (direct labor) time spent on each return is 3.0 hours. The direct labor standard wage rate at the firm is $16.50 per hour. Last month, 1,470 direct labor hours were used to prepare 500 tax returns. Total wages were $26,460.
Requirements
- 1. What is the actual (direct labor) wage rate per hour paid last month?
- 2. What is the direct labor rate variance?
- 3. What is the direct labor efficiency variance?
- 4. How might the direct labor rate variance for the firm last month be causing the direct labor efficiency variance?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
ShawnTech is a for-profit vocational school. The school bases its budgets on two measures of activity (i.e., cost drivers), namely student and course. The school uses the following data in its budgeting:
Fixed element per month
variable element per student
variable element per course
revenue
$0
$354
$0
faculty wages
$0
$0
$2,300
course supplies
$0
$48
$40
administrative expenses
$41,700
$13
$21
In October, the school budgeted for 1,400 students and 127 courses. The actual activity for the month was 1,500 students and 129 courses.
Prepare a report showing the school's activity variances for October. Label each variance as favorable (F) or unfavorable (U).
MANAGEMENT ACCOUNTING & CONTROL
STANDARD COSTS AND VARIANCE ANALYSIS
LEARNING ACTIVITY 1
Torres Company has established standard costs for the cabinet department, in which one size of MX cabinet is made. The standard costs of producing one of these MX cabinets are shown below:
Standard Cost Card – MX Cabinet
Direct Material: Lumber 50 board ft at P 4
200
Direct Labor: 8 hours at P 10
80
Overhead Costs: Variable – 8 hrs at P5
40
Fixed – 8 hrs at P3
24
Total Standard Unit Cost
344
During June 2018, 500 of these cabinets were produced. The cost of operations during the month are shown below. There is no work in process at the beginning and end of the month.
Direct material purchased: 30,000 bf at P4.10
123,000
Direct materials used: 24,000 board ft
Direct labor: 4,200 hrs at P9.50
39,900
Overhead Costs : Variable Costs
22,000
Fixed Costs
11,000…
Average labor cost for the first 700 units of a product is RO 50 and the average labor cost of first 1400 units is RO 45. Average time per unit is 100 minutes. The learning ratio and the average labour cost for first 2800 units will be:
a.
80% and RO 36.000
b.
90% and RO 40.500
c.
85% and RO 38.250
d.
95% and RO 42.750
Chapter 11 Solutions
Managerial Accounting (5th Edition)
Ch. 11 - (Learning Objective 1) Which of the following is...Ch. 11 - (Learning Objective 2) The direct material price...Ch. 11 - Prob. 3QCCh. 11 - Prob. 4QCCh. 11 - Prob. 5QCCh. 11 - (Learning Objective 4) Which of the following is...Ch. 11 - Prob. 7QCCh. 11 - (Learning Objective 6) Which of the following is...Ch. 11 - Prob. 9QCCh. 11 - (Learning Objective 7Appendix) Which of the...
Ch. 11 - Compute the standard cost of direct materials...Ch. 11 - Compute the standard cost of direct labor...Ch. 11 - Explain a direct material variance (Learning...Ch. 11 - Prob. 11.4SECh. 11 - Calculate direct material variances when the...Ch. 11 - Calculate direct labor variances (Learning...Ch. 11 - Prob. 11.7SECh. 11 - Prob. 11.8SECh. 11 - Calculate fixed overhead variances (Learning...Ch. 11 - Calculate and interpret fixed overhead variances...Ch. 11 - Prob. 11.11SECh. 11 - Calculate and interpret overhead variances...Ch. 11 - Record costing transactions (Learning Objective 7)...Ch. 11 - Record standard costing transactions (Learning...Ch. 11 - Identify ethical standards violated (Learning...Ch. 11 - Vocabulary (Learning Objectives 1, 2, 3, 4, 5, 6)...Ch. 11 - Calculate standard cost and gross profit per unit...Ch. 11 - Calculate standard cost per unit (Learning...Ch. 11 - Calculate and explain direct material variances...Ch. 11 - Calculate missing direct material variables...Ch. 11 - Calculate and explain direct labor variances...Ch. 11 - Calculate and interpret direct material and direct...Ch. 11 - Calculate the material and labor variances...Ch. 11 - Record materials and labor transactions (Learning...Ch. 11 - Calculate the standard cost of a product before...Ch. 11 - Recognize advantages and disadvantages of standard...Ch. 11 - Compute and interpret overhead variances (Learning...Ch. 11 - Data Set for E11-28A through E11-32A Country...Ch. 11 - Data Set for E11-28A through E11-32A Country...Ch. 11 - Data Set for E11-28A through E11-32A Country...Ch. 11 - Make journal entries in a standard costing system...Ch. 11 - Prepare a standard cost income statement (Learning...Ch. 11 - Calculate standard cost and gross profit per unit...Ch. 11 - Calculate the standard cost per unit (Learning...Ch. 11 - Calculate and explain direct material variances...Ch. 11 - Calculate missing direct material variables...Ch. 11 - Calculate and explain direct labor variances...Ch. 11 - Prob. 11.38BECh. 11 - Prob. 11.39BECh. 11 - Prob. 11.40BECh. 11 - Prob. 11.41BECh. 11 - Recognize advantages and disadvantages of standard...Ch. 11 - Calculate and interpret overhead variances...Ch. 11 - Prob. 11.44BECh. 11 - Prob. 11.45BECh. 11 - Prob. 11.46BECh. 11 - Prob. 11.47BECh. 11 - Prob. 11.48BECh. 11 - Prob. 11.49APCh. 11 - Comprehensive standards and variances problem...Ch. 11 - Comprehensive standards and variances problem...Ch. 11 - Prob. 11.52APCh. 11 - Prob. 11.53APCh. 11 - Prob. 11.54BPCh. 11 - Comprehensive standards and variances problem...Ch. 11 - Comprehensive standards and variances problem...Ch. 11 - Work backward through labor variances (Learning...Ch. 11 - Determine all variances and make journal entries...Ch. 11 - Calculate labor variances in a hotel (Learning...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- In a study of how chief executive officers (CEOs) spend their days, it was found that CEOs spend an average of about 18 hours per week in meetings, not including conference calls, business meals, and public events. Shown here are the times spent per week in meetings (hours) for a sample of 25 CEOs: a. What is the least amount of time a CEO spent per week in meetings in this sample? The highest? b. Use a class width of 2 hours to prepare a frequency distribution and a percent frequency distribution for the data. c. Prepare a histogram and comment on the shape of the distribution.arrow_forwardLearnCo manufactures and sells one product, an abacus for classroom use, with two models, the Basic model and the Deluxe model. The company began operations on January 1, 20Y1, and is planning for 20Y2, its second year of operations, by preparing budgets from its master budget. The company is trying to decide how many units to manufacture, how much it might spend on direct materials and direct labor, and what their factory overhead expenses might be. In addition, the company is interested in budgeting for selling and administrative costs, and in creating a budgeted income statement showing a prediction of net income for 20Y2. You have been asked to assist the controller of LearnCo in preparing the 20Y2 budgets. The sales budget often uses the prior year’s sales as a starting point, and then sales quantities are revised for various factors such as planned advertising and promotion, projected pricing changes, and expected industry and general economic conditions. LearnCo has…arrow_forwardYour company has received an order for 20 units of aproduct. Th e labor cost to produce the item is $9.50 per hour. Th esetup cost for the item is $60 and material costs are $25 per unit. Th e item is sold for $92. Th e learning rate is 80 percent. Overheadis assessed at a rate of 55 percent of unit labor cost.(a) Determine the average unit cost for the 20 units if the fi rstunit takes four hours.(b) Determine the minimum number of units that need to bemade before the selling price meets or exceeds the averageunit cost.arrow_forward
- Pease Contractors is a local home remodeling company. In analyzing financial performance, the accountant compares actual results with a flexible budget. The standard direct labor rates used in the flexible budget are established each year at the time the annual plan is formulated and held constant for the entire year. The standard direct labor rates in effect for the current fiscal year and the standard hours allowed for the actual output of work for August are shown in the following schedule. Worker Classification Standard Direct Labor Rate per Hour Standard Direct Labor-Hours Allowed for Output Supervisor $ 50 1,800 Skilled 30 2,250 General 20 4,950 The actual direct labor-hours worked and the actual direct labor rates per hour experienced for the month of August were as follows. Worker Classification Actual Direct Labor Rate per Hour Actual Direct Labor-Hours Supervisor $ 54 2,112 Skilled 32 2,112 General 18 5,376 Required: Calculate the dollar…arrow_forwardLearnCo LearnCo manufactures and sells one product, an abacus for classroom use, with two models, the Basic model and the Deluxe model. The company began operations on January 1, 20Y1, and is planning for 20Y2, its second year of operations, by preparing budgets from its master budget. The company is trying to decide how many units to manufacture, how much it might spend on direct materials and direct labor, and what their factory overhead expenses might be. In addition, the company is interested in budgeting for selling and administrative costs, and in creating a budgeted income statement showing a prediction of net income for 20Y2. You have been asked to assist the controller of LearnCo in preparing the 20Y2 budgets. Sales Budget The sales budget often uses the prior year’s sales as a starting point, and then sales quantities are revised for various factors such as planned advertising and promotion, projected pricing changes, and expected industry and general economic conditions.…arrow_forwardJoy is a company that manufactures a product called”Gladys”. The company is contemplating engaging an MBA graduate to manage its budgets. The following information is unveiled to you for the six months period ended 31st December 2021: July August September October November December Sales(Units) 480 520 640 750 700 600 Production(Units) 550 500 700 720 715 510 Additional data: (i) The selling price per unit is set at K13,800 per unit for July, August and September and K14,900 for October, November and December. (ii) The sales policy is to receive 65% of the sales value in the month of sale and the balance the month after sale. (iii) Purchases for production are used in the month of purchase and paid for one month after purchase. The cost per unit has been set at K8,300 for July and August,K8,700 for September and October and…arrow_forward
- College Memories, Inc., publishes college yearbooks. A monthly flexible overhead budget for the firm follows. Budgeted Cost 1,500 1,750 2,000 Variable costs: Indirect material: Glue .....................................$ 750 $ 875 $ 1,000 Tape ............................................300 350 400 Miscellaneous supplies ...............3,000 3,500 4,000 Indirect labor ..............................7,500 8,750 10,000 Utilities: Electricity ..............................1,500 1,750 2,000 Natural gas ..................................450 525 600 Total variable cost $ 13,500 $ 15,750 $ 18,000 Fixed costs: Supervisory labor.................. 12,500…arrow_forwardCollege Memories, Inc., publishes college yearbooks. A monthly flexible overhead budget for the firm follows. Budgeted Cost 1,500 1,750 2,000 Variable costs: Indirect material: Glue .....................................$ 750 $ 875 $ 1,000 Tape ............................................300 350 400 Miscellaneous supplies ...............3,000 3,500 4,000 Indirect labor ..............................7,500 8,750 10,000 Utilities: Electricity ..............................1,500 1,750 2,000 Natural gas ..................................450 525 600 Total variable cost $ 13,500 $ 15,750 $ 18,000 Fixed costs: Supervisory labor.................. 12,500…arrow_forwardRuth, the owner of Crystal Clean, is planning for the next year. She uses the absorption method to determine the evaluation of employees and how much to increase their hourly wage. She has budgeted the following information: Variable operating expenses $4 per unitFixed operating expenses $211900 Variable manufacturing cost $11 per unitFixed manufacturing cost $253000 Units to be produced 25300 unitsUnit selling price $31 per unit Year 1 Year 2 Beginning inventory (units) 0 1400 Actual production (units) 23800 25800 Sales volume (units) 22400 26500 There were no price or efficiency variances for either year. Ruth writes off any fixed MOH volume variance directly to COGS. Calculate the gross margin for year 1.…arrow_forward
- Scott Sykes publishes a pilot training course curriculum kit that he sells to flight schools across the country. He prepared the following static budget for the year based on expected sales of 22,500 curriculum kits. Sales revenue $2,812,500 Variable cost of goods sold 1,125,000 Variable selling and administrative expenses 337,500 Contribution margin 1,350,000 Fixed manufacturing overhead 630,000 Fixed selling and administrative expenses 277,500 Operating income $442,500 At the end of the year, Scott had sold 23,250 curriculum kits at an average rate of $96 per hour. During the year, he incurred fixed overhead totaling $625,500.Calculate the fixed overhead spending variance. (If variance is zero, select "Not Applicable" and enter 0 for the amounts.) Fixed overhead spending variance $ UnfavorableFavorableNot Applicablearrow_forwardSouthwest Missouri Insurance sells insurance to students to protect them from crappy professors. Students pay monthly insurance fees, and if they have a terrible professor, they can drop out of the class and the insurance payment will pay them back for their class fees.Southwest Missouri Insurance has the following actual January revenue and budgeted February-March revenues: January (Actual) February (Budget) March (Budget) Cash sales $80,000 $100,000 $60,000 Credit sales $240,000 $360,000 $180,000 Total sales $320,000 $460,000 $240,000 Southwest Missouri Insurance estimates that 5% of all credit sales will be uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. The company has a gross profit margin of 30%. What are the budgeted cash receipts for March? Choosebelow: $299,400 $296,400 $312,000 $239,000arrow_forwardJackson County Senior Services is a nonprofit organization devoted to providing essential services to seniorswho live in their own homes within the Jackson County area. (DATA is Available in the picture) The company measures its activity in terms of flights. Customers can buy individual tickets for overflightsor hire an entire plane for an overflight at a discount. Required: Prepare the company Planning Budget by using planning data at 60 Flights. Prepare company flexible budgets by flex data (at 70 Flights) Prepare a complete variance report showing the company’s Activity and Revenue and spending variances for August.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Essentials of Business Analytics (MindTap Course ...
Statistics
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Responsibility Accounting| Responsibility Centers and Segments| US CMA Part 1| US CMA course; Master Budget and Responsibility Accounting-Intro to Managerial Accounting- Su. 2013-Prof. Gershberg; Author: Mera Skill; Rutgers Accounting Web;https://www.youtube.com/watch?v=SYQ4u1BP24g;License: Standard YouTube License, CC-BY