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Chapter 23: Q7SE (page 1307)

Martin, Inc. manufactures lead crystal glasses. The standard direct labor time is 0.5 hours per glass, at a cost of \(18 per hour. The actual results for one month鈥檚 production of 6,500 glasses were 0.2 hours per glass, at a cost of \)11 per hour. Calculate the direct labor cost variance and the direct labor efficiency variance.

Short Answer

Expert verified

The direct labor cost variance of the company is $63,700(F)

The direct labor efficiency variance of the company is $35,100(F).

Step by step solution

01

Meaning of Variances

Cost variances refer to the difference between the actual cost incurred and the budgeted costs.

02

Computation of the direct labor cost variance-

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03

Computation of the direct labor efficiency variance-

顿颈谤别肠迟鈥尘补迟别谤颈补濒鈥塭蹿蹿颈肠颈别苍肠测鈥塿补谤颈补苍肠别=础肠迟耻补濒鈥堑耻补苍迟颈迟测鈭�厂迟补苍诲补谤诲鈥堑耻补苍迟颈迟测脳厂迟补苍诲补谤诲鈥塩辞蝉迟=6500脳0.2鈭�6500脳0.5脳$18=1300鈭�3250脳18=$35,100鈥塅

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Most popular questions from this chapter

McCarthy Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018. The 2018 revenue and cost information for McCarthy follows:

Sales Revenue \( 1,300,000

Cost of Goods Sold (at standard) 196,800

Direct materials cost variance 7,150 F

Direct materials efficiency variance 5,950 U

Direct labor cost variance 400 U

Direct labor efficiency variance 530 F

Variable overhead cost variance 650 U

Variable overhead efficiency variance 360 F

Fixed overhead cost variance 2,350 U

Fixed overhead volume variance 4,410 U

Assume each fender produced was sold for the standard price of \)65, and total selling and administrative costs were $250,000. Prepare a standard cost income statement for 2018 for McCarthy Fender

List the eight product variances and the manager most likely responsible for each.

Question: What is a static budget performance report?

Marsh Company uses a standard cost system and reports the following information for 2018:

Standards:

3 yards of cloth per unit at \(1.05 per yard

2 direct labor hours per unit at \)10.50 per hour

Overhead allocated at \(5.00 per direct labor hour

Actual:

2,600 yards of cloth were purchased at \)1.10 per yard

Employees worked 1,800 hours and were paid \(10.00 per hour

Actual variable overhead was \)1,700

Actual fixed overhead was \(7,300

Direct materials cost variance \) 130 U

Direct materials efficiency variance 420 F

Direct labor cost variance 900 F

Direct labor efficiency variance 2,100 F

Variable overhead cost variance 1,500 U

Variable overhead efficiency variance 1,500 F

Fixed overhead cost variance 600 U

Fixed overhead volume variance 1,600 F

Marsh produced 1,000 units of finished product in 2018. Record the journal entries to record direct materials, direct labor, variable overhead, and fixed overhead, assuming all expenditures were on account and there were no beginning or ending balances in the inventory accounts (all materials purchased were used in production, and all goods produced were sold). Record the journal entries to record the transfer to Finished Goods Inventory and Cost of Goods Sold (omit the journal entry for Sales Revenue). Adjust the Manufacturing Overhead account

The May 2018 revenue and cost information for McDonald Outfitters, Inc. follows:

Sales Revenue (at standard) $ 610,000

Cost of Goods Sold (at standard) 348,000

Direct Materials Cost Variance 1,500 F

Direct Materials Efficiency Variance 6,600 F

Direct Labor Cost Variance 4,200 U

Direct Labor Efficiency Variance 2,700 F

Variable Overhead Cost Variance 2,800 U

Variable Overhead Efficiency Variance 1,100

Fixed Overhead Cost Variance 2,300 U

Fixed Overhead Volume Variance 8,300 F

Prepare a standard cost income statement for management through gross profit. Report all standard cost variances for management鈥檚 use. Has management done a good or poor job of controlling costs? Explain.
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