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The director of cost management for Portland Instrument Corporation compares each month's actual results with a monthly plan. The standard direct-labor rates for the year
The director of cost management for Portland 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. Labor class III Labor class II Labor class I Standard Direct- Labor Rate per Hour $25.30 Standard Direct-Labor Hours Allowed, Given April Output 22.30 16.30 2,300 2,300 2,300 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: Labor class III Labor class II Labor class I Actual Direct- Labor Rate per Hour $27.10 23.80 17.50 Actual Direct- Labor Hours 2,400 2,600 2,050 Required: 1-a. Compute the direct-labor rate variance for each labor class for the month of April. 1-b. Compute the direct-labor efficiency variance for each labor class for the month of April. 2. Which of the following could be considered an advantage of using a standard-costing system in which the standard direct-labor rates are not changed during the year to reflect such events as a new labor contract? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Compute the 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 "0" for no effect (i.e., zero variance).) Labor Class III || | Total Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Compute the 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 "0" for no effect (i.e., zero variance).) Labor Class III || | Total Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Which of the following could be considered an advantage of using a standard-costing system in which the standard direct- labor rates are not changed during the year to reflect such events as a new labor contract? (Select "Yes" if the listed item can be considered an advantage of using a standard-costing system, and "No" if it is not.) Computer/clerical costs of implementing a change will not be incurred. Actual operating results will be compared to a previously approved standard The credibility of the direct-labor variances will be maintained. The noncontrollable portion of the direct-labor variances will decrease
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