Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Utease Corporation has several production plants nationwide. A newly opened plant in Dubuque produces and sells one product. The plant is treated, for responsibility accounting

Utease Corporation has several production plants nationwide. A newly opened plant in Dubuque produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows.

Manufacturing costs (per unit based on expected activity of 21,000 units or 48,300 direct labor hours):

Direct materials (2.8 pounds at $10) $ 28.00
Direct labor (2.3 hours at $80) 184.00
Variable overhead (2.3 hours at $30) 69.00
Fixed overhead (2.3 hours at $40) 92.00
Standard cost per unit $ 373.00
Budgeted selling and administrative costs:
Variable $ 8 per unit
Fixed $ 1,000,000

Expected sales activity: 19,000 units at $500 per unit

Desired ending inventories: 14% of sales

Assume this is the first year of operations for the Dubuque plant. During the year, the company had the following activity.

Units produced 20,000
Units sold 18,500
Unit selling price $ 495
Direct labor hours worked 45,500
Direct labor costs $ 3,685,500
Direct materials purchased 60,000 pounds
Direct materials costs $ 600,000
Direct materials used 60,000 pounds
Actual fixed overhead $ 800,000
Actual variable overhead $ 1,349,000
Actual selling and administrative costs $ 2,152,000

In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold.

c. Find the direct labor variances. Indicate if they are favorable or unfavorable. (Do not round your intermediate calculations. Indicate the effect of each variance by selecting Favorable, Unfavorable, and "None" for no effect.)

DIRECT LABOR VARIANCES:

Labor efficiency Variance _____________ (favorable, unfavorable, none?)

Labor rate Variance _________________ (favorable, unfavorable, none?)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Practical Pension Scheme Accounting

Authors: Shona Harvie, Joanne Scriven, Phil Spary

2nd Edition

1526508974, 9781526508973

More Books

Students also viewed these Accounting questions