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Requirements 1. Compute the direct labor rate variance and the direct labor efficiency variance. 2. What is the total variance for direct labor? 3. Who

Requirements

1.

Compute the direct labor rate variance and the direct labor efficiency variance.

2.

What is the total variance for direct labor?

3.

Who is generally responsible for each variance?

4.

Interpret the variances.

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Ceramics Etc. 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 Requirement 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 the nearest cent, 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. Actual hours X Actual rate Standard rate = DL rate varianceStandard Price and Volume 14 pounds per pot at a cost of $4.00 per Direct materials (resin) . . . . pound Direct labor. . . . . . 2.0 hours at a cost of $14.00 per hour Standard variable manufacturing overhead rate . . . . . $4.00 per direct labor hour Budgeted fixed manufacturing overhead . . . . . $18,600 Standard fixed MOH rate. . . . .. . $6.00 per direct labor hour (DLH) Print DoneActual Results Ceramics Etc. 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 1,800 flower pots: Purchased 26,680 pounds at a cost of $4.10 per pound; Direct materials. . . . used 26,280 pounds to produce 1,800 pots Worked 2.4 hours per flower pot (4,320 total DLH) at a Direct labor . . . . cost of $12.00 per hour Actual variable manufacturing $4.70 per direct labor hour for total actual variable overhead . . . . manufacturing overhead of $20,304 Actual fixed manufacturing overhead $18,000 Standard fixed manufacturing overhead allocated based on actual production. . . . . $21,600 Print Done

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