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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

A new assistant controller recently was heard to remark: “All the assembly workers in this plant are covered by union contracts, so there should be no labor variances.” Was the controller’s remark correct? Discuss.

To determine

Direct labor variances:

The difference between the actual labor cost in the production and the standard labor cost for actual production is known as direct labor cost variance. The direct labor variance can be classified as follows:

    • Labor rate variance.
    • Labor time variance.

To Discuss: Whether the controller’s remark was correct.

Explanation

The controller’s remark was incorrect because, even though the entire assembly worker’s in the plant are covered by the union contracts still there would be direct labor cost variance.

  • The cause of assigning the higher-paid workers in the place of jobs that c...

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