1.

DIRECT LABOR FLEIBLE BUDGET VARIANCE

FAVORBALE LABOR RATE VARIANCE

STANDARD DIRECT LABOR HRS

STANDARD DIRECT LABOR RATE PER HR

2.

ACTUAL HRS

ACTUAL RATE

STANDARD HRS ALLOWED

STANDARD RATE

FAVORABLE / UNFAVORABLE

FAVORABLE / UNFAVORABLE

HIGHER PAID, MORE EFFICIENT / LOWER PAID, LESS EFFICIENT

A REASONABLE TRADE-OFF / NO TRADE OFF

1. Find the actual number of direct labor hours worked during February. First, find the actual direct labor rate per hour. Then, determine the actual number of direct labor hours worked by setting up the computation of the total direct labor variance as given. 2. Compute the direct labor rate and efficiency variances. Do these variances suggest that the manager may have made trade-offs? Explain. Mustang Music manufactures harmonicas. Mustang uses standard costs to judge performance. Recently, a clerk mistakenly threw away some of the records, and only partial data for February exist. Mustang knows that the total direct labor variance for the month was $300 F and that the standard labor rate was $11 per hour. A recent pay cut caused a favorable labor rate variance of $0.60 per hour. The standard direct labor hours for actual February outputs were 5,700 Read the requirements Requirement 1. Find the actual number of direct labor hours worked during February. First, find the actual direct labor price rate per hour. Then, determine the actual number of direct labor hours worked by setting up the computation of the total direct labor variance as given Select the formula, then calculate the actual price per hour Actual direct labor rate per hour Determine the actual number of direct labor hours worked by setting up the computation of the total direct labor variance as given. (Enter the known amounts, then determine the missing amounts to solve for the actual direct labor hours. Enter the amounts as positive numbers. Label the variance as favorable (F) or unfavorable (U).) Mustang Music Schedule to Compute Actual Direct Labor Hours Flexible budget for actual output Flexible budget variance Actual Direct labor hours Cost per hour Total direct labor cost Flexible budget variance Requirement 2. Compute the direct labor rate and efficiency variances. Do these variances suggest that the manager may have made trade-offs? Explain. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: DL = Direct labor.) Begin by determining the formula for the price variance, then compute the price variance for direct labor. DL rate variance x ( Now determine the formula for the efficiency variance, then compute the efficiency variance for direct labor DL efficiency )variance x ( Do these variances suggest that the manager may have made trade-offs? Explain. The manager may have used direct labor rate variance combined with the direct labor efficiency variance suggests that the workers. However, due to the overall net effect, it appears there was Choose from any list or enter any number in the input fields and then continue to the next