At a recent seminar you attended, the invited speaker was discussing some of the advantages and disadvantages of standard costs in terms of evaluating performance and motivating goal-congruent behavior on the part of employees. One criticism of standard costs in particular caught your attention: The use of conventional standard costs may not provide appropriate incentives for improvements needed to compete effectively with world-class organizations. The speaker then discussed so-called continuous-improvement to budget a 1.0% reduction in per-unit direct labor cost. Assume that the standard wage rate into the foreseeable future is $24 per hour. Assume, too, that the budgeted labor-hour standard for October of the current year is 2.90 hours and that this standard is reduced each month by 196 . During December of the current year the company produced 6,800 units of XL-10, using 22,000 direct labor hours. The actual wage rate per hour in December was $26.00. Required: 1. Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the 4 months, October through January. 2. Compute the direct labor efficiency variance for December. Was this variance favorable or unfavorable? Complete this question by entering your answers in the tabs below. Prepare a table that contains the standard tabor-hour requirement per unit and standard direct labor cost per unit for the 4 months, October through January, (Do not round intermediate calculations. Round your "Standard birect Labor Cost/Unit" answers to 2 decimal places and "Standard Labor-Hour Requirement/ Unit" anpwers to 5 decimal places) At a recent seminar you attended, the invited speaker was discussing some of the advantages and disadvantages of standard costs in terms of evaluating performance and motivating goal-congruent behavior on the part of employees. One criticism of standard costs in particular caught your attention: The use of conventional standard costs may not provide appropriate incentives for improvements needed to compete effectively with world-class organizations. The speaker then discussed so-called continuous-improvernent standard costs. Such standards embody systematically lower costs over time. For example, on a monthly basis, it might be appropriate to budget a 1.0% reduction in per-unit direct labor cost Assume that the standard wage rate into the foreseeable future is $24 per hour. Assume, too, that the budgeted labor-hour standard for October of the current year is 2.90 hours and that this standard is reduced each month by 19 . During December of the current year the company produced 6,800 units of XL-10, using 22,000 direct labor hours. The actual wage rate per hour in December was $26.00. Required: 1. Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the 4 months, October through January. 2. Compute the direct labor efficiency variance for December Was this variance favorable or unfavorable? Complete this question by entering your answers in the tabs below. Compute the direct labor efficiency variance for December. Was this varlance favorable or unfavorable? (Round your final answer to nearest whole dollar amount.)
