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The Morgan Restaurant Group manufactures the bags of frozen French fries used at its franchised restaurants. Last week, Morgan's purchased and used 99,000 pounds
The Morgan Restaurant Group manufactures the bags of frozen French fries used at its franchised restaurants. Last week, Morgan's purchased and used 99,000 pounds of potatoes at a price of $0.75 per pound. During the week, 2.400 direct labor hours were incurred in the plant at a rate of $12.45 per hour. The standard price per pound of potatoes is $0.90, and the standard direct labor rate is $12.25 per hour. Standards indicate that for the number of bags of frozen fries produced, the factory should have used 96,000 pounds of potatoes and 2.100 hours of direct labor because the potatoes were lower grade, some of the potatoes were bad, and could not be used in production As a result, the manufacturing facility had to use more potatoes than standards allow. This accounts for the unfavorable efficiency variance. Requirement 3. Determine the direct labor rate and efficiency variances. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: DL Direct labor.) Begin wth the the direct labor rate variance. First determine the formula for the rate variance, then compute the rate variance for direct labor. ) = DL rate variance
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