Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
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Chapter 23, Problem 23.13EX
Direct labor variances for a service company
Hit-n-Run Food Trucks, Inc. owns and operates food trucks (mobile kitchens) throughout the West Coast. The company’s employees have varying wage levels depending on their experience and length of time with the company. Employees work eight-hour shifts and are assigned to a truck each day based on labor needs to support the daily menu. One of the trucks, Jose O’Brien’s Mobile Fiesta, specializes in Irish-Mexican fusion cuisine. The truck offers a single menu item that changes daily. On November 11, the truck prepared 200 of its most popular item, the Irish Breakfast Enchilada. The following data are available for that day:
| Quantity of direct labor used | |
| (3 employees, working 8-hour shifts) | 24 hrs. |
| Actual rate for direct labor | $15.00 per hr. |
| Standard direct labor per meal | 0.1 hr. |
| Standard rate for direct labor | $15.50 per hr. |
a. Determine the direct labor rate variance, the direct labor time variance, and the total direct labor cost variance.
b. Discuss what might have caused these variances.
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Direct manufacturing labor variances: price, efficiency, mix, and yield. Elena Martinez employs two workers in her wedding cake bakery. The rst worker, Gabrielle, has been making wedding cakes for 20 years and is paid $25 per hour. The second worker, Joseph, is less experienced and is paid $15 per hour. One wedding cake requires, on average, 6 hours of labor. The budgeted direct manufacturing labor quantities for one cake are as follows:
Variable Overhead Variances
Logistics Solutions provides order fulfillment services for dot.com merchants. The company mainains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Logistics Solutions, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours.
In the most recent month, 120,000 items were shipped to customers using 2,300 direct labor-hours. The company incurred a total of $7,360 in variable overhead costs.
According to the company’s standards, 0.02 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $3.25 per direct labor-hour.
Required:
1. What is the standard labor-hours allowed (SH) to ship 120,000 items to customers?
2. What is the standard variable overhead cost allowed (SH × SR) to ship 120,000 items to customers?
3. What is the variable…
Variable Factory Overhead Variances; Journal Entries The Platter Valley factory of BybeeIndustries manufactures field boots. The cost of each boot includes direct materials, direct labor,and manufacturing (factory) overhead. The firm traces all direct costs to products, and it assignsoverhead cost to products based on direct labor hours.The company budgeted $15,000 variable factory overhead cost and 2,500 direct labor hours tomanufacture 5,000 pairs of boots in March.The factory used 2,700 direct labor hours in March to manufacture 4,800 pairs of boots and spent$15,600 on variable overhead during the month.[LO 15-1, 15-2][LO 15-1, 15-2][LO 15-2, 15-3]Final PDF to printer656 Part Three Operational-Level Controlblo17029_ch15_621-670.indd 656 02/20/18 09:49 AMRequired1. Compute the factory overhead flexible-budget variance, the factory overhead spending variance, andthe efficiency variance for variable factory overhead for March. Round each variance to the nearestwhole number, and state…
Chapter 23 Solutions
Accounting
Ch. 23 - What are the basic objectives in the use of...Ch. 23 - What is meant by reporting by the principle of...Ch. 23 - What are the two variances between the actual cost...Ch. 23 - The materials cost variance report for Nickols...Ch. 23 - a. What are the two variances between the actual...Ch. 23 - Prob. 6DQCh. 23 - Would the use of standards be appropriate in a...Ch. 23 - a. Describe the two variances between the actual...Ch. 23 - If variances are recorded in the accounts at the...Ch. 23 - Briefly explain why firms might use nonfinancial...
Ch. 23 - Direct materials variances Bellingham Company...Ch. 23 - Direct materials variances Dvorak Company produces...Ch. 23 - Direct labor variances Bellingham Company produces...Ch. 23 - Direct labor variances Dvorak Company produces a...Ch. 23 - Factory overhead controllable variance Bellingham...Ch. 23 - Factory overhead controllable variance Dvorak...Ch. 23 - Factory overhead volume variance Bellingham...Ch. 23 - Factory overhead volume variance Dvorak Company...Ch. 23 - Standard cost journal entries Bellingham Company...Ch. 23 - Standard cost journal entries Dvorak Company...Ch. 23 - Income statement with variances Prepare an income...Ch. 23 - Income statement with variances Prepare an income...Ch. 23 - Prob. 23.7APECh. 23 - Prob. 23.7BPECh. 23 - Standard direct materials cost per unit Roanoke...Ch. 23 - Standard product cost Sana Rosa Furniture Company...Ch. 23 - Budget performance report Genie in a Botile...Ch. 23 - Direct materials variances The following data...Ch. 23 - Direct materials variances Silicone Engine Inc....Ch. 23 - Standard direct materials cost per unit from...Ch. 23 - Standard product cost, direct materials variance...Ch. 23 - Direct labor variances The following data relate...Ch. 23 - Direct labor variances La Barte Company...Ch. 23 - Direct tabor variances Greeson Clothes Company...Ch. 23 - Direct labor standards for nonmanufacturing...Ch. 23 - Direct labor standards for a service company One...Ch. 23 - Direct labor variances for a service company...Ch. 23 - Direct materials and direct labor variances At the...Ch. 23 - Flexible overhead budget Leno Manufacturing...Ch. 23 - Flexible overhead budget Wiki Wiki Company has...Ch. 23 - Factory overhead cost variances The following data...Ch. 23 - Factory overhead cost variances Blumen Textiles...Ch. 23 - Factory overhead variance corrections The data...Ch. 23 - Factory overhead cost variance report Tannin...Ch. 23 - Recording standards in accounts Cioffi...Ch. 23 - Recording standards in accounts The Assembly...Ch. 23 - Income statement indicating standard cost...Ch. 23 - Prob. 23.24EXCh. 23 - Nonfinancial performance measures Alpha University...Ch. 23 - Direct materials and direct labor variance...Ch. 23 - Flexible budgeting and variance analysis I Love My...Ch. 23 - Direct materials, direct labor, and factory...Ch. 23 - Factory overhead cost variance report Tiger...Ch. 23 - Standards for nonmanufacturing expanses Code Head...Ch. 23 - Direct materials and direct labor variance...Ch. 23 - Flexible budgeting and variance analysis Im Really...Ch. 23 - Direct materials, direct labor, and factory...Ch. 23 - Factory overhead cost variance report Feeling...Ch. 23 - Prob. 23.5BPRCh. 23 - Genuine Spice Inc. began operations on January 1...Ch. 23 - Ethics in Action Dash Riprock is a cost analyst...Ch. 23 - Communication The senior management of Tungston...Ch. 23 - Variance interpretation You have been asked to...Ch. 23 - Variance interpretation Vanadium Audio Inc. is a...
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY