Question
Adamss Doll Company produces handmade dolls. The standard amount of time spent on each doll is 1.50 hours. The standard cost of labor is $7.79
Adamss Doll Company produces handmade dolls. The standard amount of time spent on each doll is 1.50 hours. The standard cost of labor is $7.79 per hour. The company planned to make 7,500 dolls during the year but actually used 11,750 hours of labor to make 8,200 dolls. The payroll amounted to $95,175. Required Should labor variances be based on the planned volume of 7,500 dolls or the actual volume of 8,200 dolls? Prepare a table that shows the standard labor price, the actual labor price, the standard labor hours, and the actual labor hours. Compute the labor price variance and indicate whether it is favorable (F) or unfavorable (U). Compute the labor usage variance and indicate whether it is favorable (F) or unfavorable (U).
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