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Problem 10-40 Direct-Labor Variances (LO 10-1, 10-3) The director of cost management for Peoria Instrument Corporation compares each month's actual results with a monthly plan.
Problem 10-40 Direct-Labor Variances (LO 10-1, 10-3) The director of cost management for Peoria Instrument Corporation compares each month's actual results with a monthly plan. The standard direct-labor rates for the year just ended and the standard hours allowed, given the actual output in April, are shown in the following schedule Standard Direct-Labor Standard Direct Labor Rate per Hour Hours Output 1,400 1,400 Allowed, Given April Labor class $24.40 Labor class Il Labor class l 21.40 15.40 1,400 A new union contract negotiated in March resulted in actual wage rates that differed from the standard rates. The actual direct-labor hours worked and the actual direct-labor rates per hour experienced for the month of April were as follows Actual Direct Actual Direct Labor Rate per Hour Labor classII $26.20 Labor class II Labor class I Labor Hours 1,500 1,700 1150 22.90 16.60 Required: 1-a.Compute a direct-labor rate variance for each labor class for the month of April. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable. Select "None" and enter "O" for no effect (i.e., zero variance).) Labor Class Total 1-b.Compute a direct-labor efficiency variance for each labor class for the month of April (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Labor Class Total
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