11#4

is a manufacturer of large flower pots for urban settings. The company has these standards:

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(Click the icon to view the standards.)

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(Click the icon to view the actual results.)Read the requirements

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.

Requirement 1. Compute the direct labor rate variance and the direct labor efficiency variance. (Enter the variances as positive numbers. Enter the currency amounts in the formulas to the nearest cent, then round the final variance amounts to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U). Abbreviations used: DL = Direct labor)

Begin with the direct labor rate variance. First determine the formula for the rate variance, then compute the rate variance for direct labor.

		(		-		)	=	DL rate variance
		(		-		)	=

Now compute the direct labor efficiency variance. First determine the formula for the efficiency variance, then compute the efficiency variance for direct labor.

		(		-		)	=	DL efficiency variance
		(		-		)	=

Requirement 2. What is the total variance for direct labor? (Enter the amount as a positive number. Label the variance as favorable (F) or unfavorable (U).)

The total variance for direct labor is

.

Requirement 3. Who is generally responsible for each variance?

The

human resources or personnel

production

purchasing

sales

department is responsible for the labor rate variance. The

human resources or personnel

production

purchasing

sales

department is responsible for the labor efficiency variance.

Requirement 4. Interpret the variances.

The

favorable

unfavorable

labor rate variance means that

Groovy Bottles'

employees earned

less

more

per hour than budgeted. The

favorable

unfavorable

labor efficiency variance means that it actually took

less

more

direct labor hours than it should have to produce

1,500

pots.

Standard price and volume

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Direct materials (resin). . . . . . . . . . . . . . . . . . . . . . . . . . .	11 pounds per pot at a cost of $3.00 per pound
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2.0 hours at a cost of $23.00 per hour
Standard variable manufacturing overhead rate. . . . .	$8.00 per direct labor hour
Budgeted fixed manufacturing overhead. . . . . . . . . . .	$33,000
Standard fixed MOH rate. . . . . . . . . . . . . . . . . . . . . . . . .	$12.00 per direct labor hour (DLH)

Actual results

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Ceramics Etc.

allocated fixed manufacturing overhead to production based on standard direct labor hours. Last month, the company reported the following actual results for the production of

1,500

flower pots:

Direct materials. . . . . . . . . . . . . . . . . . . .	Purchased 17,550 pounds at a cost of $3.10 per pound; used 16,950 pounds to produce 1,500 pots
Direct labor. . . . . . . . . . . . . . . . . . . . . . .	Worked 2.5 hours per flower pot (3,750 total DLH) at a cost of $19.00 per hour
Actual variable manufacturing overhead. . . . . . . . . . . . . . . . . . . . . . . . .	$8.50 per direct labor hour for total actual variable manufacturing overhead of $31,875
Actual fixed manufacturing overhead	$32,400
Standard fixed manufacturing overhead allocated based on actual production. . . . . . . . . . . . . . . . . . . . . . . .	$36,000