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Grand Display is a manufacturer of large flower pots for urban settings. The company has these standards: (Click the icon to view the standards.) (Click the icon to view the actual results.) Read the requirements. Danuirament 1 Compute the direct labor rate variance and the direct labor efficiency variance. (Enter the variances as positive numbers. Enter the currency amounts in the formulas to Requirements then round the final variance amounts to the nearest whole dollar. Label the variance as favorable (F) or unfavorable (U). Abbreviations used: DL = Direct labor) Begin with the direct labor rate variance. First determine the formula for the rate variance, then compute the rate variance for direct labor. = DL rate variance Now compute the direct labor efficiency variance. First determine the formula for the efficiency variance, then compute the efficiency variance for direct labor. = DL efficiency variance Requirement 2. What is the total variance for direct labor? (Enter the amount as a positive number. Label the variance as favorable (F) or unfavorable (U).) The total variance for direct labor is Requirement 3. Who is generally responsible for each variance? The department is responsible for the labor rate variance. The department is responsible for the labor efficiency variance. Requirement 4. Interpret the variances. The labor rate variance means that Earthern Ware's employees earned per hour than budgeted. The labor efficiency variance means that it actually took direct labor hours than it should have to produce 1,700 pots.Standard Price and Volume X 9 pounds per pot at a cost of $3.00 per Direct materials (resin) . . . pound Direct labor . . . 2.0 hours at a cost of $15.00 per hour Standard variable manufacturing overhead rate . . . . . $7.00 per direct labor hour Budgeted fixed manufacturing overhead . $39,800 Standard fixed MOH rate $12.00 per direct labor hour (DLH) Print Donei Actual Results X Grand Display allocated fixed manufacturing overhead to production based on standard direct labor hours. Last month, the company reported the following actual results for the production of 1,700 flower pots: Purchased 17,090 pounds at a cost of $3.30 per pound; Direct materials . . used 16,490 pounds to produce 1,700 pots Worked 2.4 hours per flower pot (4,080 total DLH) at a Direct labor . . . cost of $13.00 per hour Actual variable manufacturing $7.40 per direct labor hour for total actual variable overhead . . manufacturing overhead of $30, 192 Actual fixed manufacturing overhead $39,200 Standard fixed manufacturing overhead allocated based on actual production $40,800 Print Done
