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The director of cost management for Portland Instrument Corporation compares each months 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 months 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 Rate per Hour Standard Direct-Labor Hours Allowed, Given April Output
Labor class III $ 24.30 1,300
Labor class II 21.30 1,300
Labor class I 15.30 1,300

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:

Actual Direct-Labor Rate per Hour Actual Direct- Labor Hours
Labor class III $ 26.10 1,400
Labor class II 22.80 1,600
Labor class I 16.50 1,050

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?

image text in transcribed

image text in transcribed \begin{tabular}{|c|c|c|} \hline Labor Class & \\ \hline III \\ \hline II \\ \hline Total & \\ \hline I & \\ \hline \end{tabular} \begin{tabular}{|c|c|} \hline Labor Class \\ \hline III \\ \hline II \\ \hline I \\ \hline Total \\ \hline \end{tabular}

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