Question
Problem 8-25A Determining labor price and usage variances LO 8-6 Zacharys Doll Company produces handmade dolls. The standard amount of time spent on each doll
Problem 8-25A Determining labor price and usage variances LO 8-6
Zacharys Doll Company produces handmade dolls. The standard amount of time spent on each doll is 1.50 hours. The standard cost of labor is $7.75 per hour. The company planned to make 7,600 dolls during the year but actually used 11,900 hours of labor to make 9,000 dolls. The payroll amounted to $95,200.
Required
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Should labor variances be based on the planned volume of 7,600 dolls or the actual volume of 9,000 dolls?
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Prepare a table that shows the standard labor price, the actual labor price, the standard labor hours, and the actual labor hours.
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Compute the labor price variance and indicate whether it is favorable (F) or unfavorable (U).
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Compute the labor usage variance and indicate whether it is favorable (F) or unfavorable (U).
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