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Gorunum 2. Sarah Beth's Art Supply Company produces various types of paints. Actual direct manufacturing labor hours in the factory that produces paint have been
Gorunum 2. Sarah Beth's Art Supply Company produces various types of paints. Actual direct manufacturing labor hours in the factory that produces paint have been higher than budgeted hours for the last few months and the owner, Sarah B. Jones, is concerned about the effect this has had on the company's cost overruns. Because variable manufacturing overhead is allocated to units produced using direct manufacturing labor hours, Sarah feels that the mismanagement oflabor will have a twofold effect on company profitability. Following are the relevant budgeted and actual results for the second quarter of 2011. Budgeted Info Actual Results Paint set production.. 25,000. 29,000 Direct manufacturing labor hours per paint set.. 2 hours. 2.3 hours Direct manufacturing labor rate $10/hour $10.40 hour Variable manufacturing overhead rate. $20/hour $18.95 hour a. Calculate the direct manufacturing labor price and efficiency variances and indicate whether each is favorable (F) or unfavorable (U). b. Calculate the variable manufacturing overhead spending and efficiency variances and indicate whether each is favorable (F) or unfavorable (U)
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