Question
Hellier Contractors paints interiors of residences and commercial structures. The firm's management has established cost standards per 100 square feet of area to be painted:
Hellier Contractors paints interiors of residences and commercial structures. The firm's management has established cost standards per 100 square feet of area to be painted:
Direct material ($18 per gallon of paint): $1.50 (so, 1 gallon should paint 1,200 square feet)
Direct labor: 2.00
Variable overhead (based on DLH): 0.60
Fixed overhead (based on DLH): 1.25 (based on 600,000 square feet per month)
Management has determined that 400 square feet can be painted by the average worker each hour. During May, the company painted 600,000 square feet of space and incurred the following costs:
Direct material (450 gallons purchased and used): $ 8,300.00
Direct labor (1,475 hours): 12,242.50
Variable overhead: 3,480.00
Fixed overhead: 7,720.00
DL Questions:
8. What were the standard hours (SH) that were budgeted to paint the 600,000 SF?
9. Determine the labor rate variance (LPV).
10. Was the LPV favorable or unfavorable?
11. Determine the labor efficiency variance (LEV).
12. Was the LEV favorable or unfavorable?
13. Determine the Total Labor Variance.
14. Was the Total Labor Variance favorable or unfavorable?
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