Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hollowell Audio, Inc., manufactures military-specification compact discs. The company uses standards to control its costs. The labor standards that have been set for one disc

Hollowell Audio, Inc., manufactures military-specification compact discs. The company uses standards to control its costs. The labor standards that have been set for one disc are as follows:


Standard
Hours
Standard
Rate
Standard
Cost
6 minutes $24.00 $2.40


During July, 2,125 hours of direct labor time were required to make 20,000 discs. The direct labor cost totaled $49,300 for the month.


Required:
1a.

According to the standards, what direct labor cost should have been incurred to make the 20,000 discs? (Do not round intermediate calculations. Omit the "$" sign in your response.)


Total standard direct labor cost $


1b.

By how much does this differ from the cost that was incurred? (Input the amount as a positive value. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)


Spending variance $


2.

Break down the difference in cost from (1) above into a labor rate variance and a labor efficiency variance. (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)


Labor rate variance $
Labor efficiency variance $


3.

The budgeted variable manufacturing overhead rate is $16.00 per direct labor-hour. During July, the company incurred $39,100 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month. (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)


Variable overhead rate variance $
Variable overhead efficiency variance $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Audit Culture How Indicators And Rankings Are Reshaping The World

Authors: Cris Shore, Susan Wright

1st Edition

0745336450, 978-0745336459

More Books

Students also viewed these Accounting questions

Question

Describe federal and state franchise disclosure laws.

Answered: 1 week ago