Question

Coral Music manufactures harmonicas. Coral uses standard costs to judge performance.​ Recently, a clerk mistakenly threw away some of the​ records, and only partial data for July exist. Coral knows that the total direct labor variance for the month was $390 F and that the standard labor rate was $9 per hour. A recent pay cut caused a favorable labor rate variance of $0.50 per hour. The standard direct labor hours for actual July outputs were 5,200. Compute and evaluate direct labor vacancies.

Answer 1

Step-by-step explanation:

std rate $9.00

actual rate $8.50

standard hours 5,200

Total variance: 390 Favorable

Rate variance:

`(standard\:rate-actual\:rate) * actual \: hours = DL \: rate \: variance`

Efficiency

`(standard\:hours-actual\:hours) * standard \: rate = DL \: efficiency \: variance`

Total:

rate + efficiency

`(standard\:rate-actual\:rate) * actual \: hours + (standard\:hours-actual\:hours) * standard \: rate = 390`

We plug our know values and solve:

`(9 - 8.5) * actual \: hours + (5,200-actual\:hours) * 9 = 390`

0.5actual hours + 46,800 - 9actual hours = 390

46,800 - 390 = 8.5 actual hours

46,410/8.5 = actual hours = 5,460

now we calculate each variance:

rate: 2,730

`(9-8.5) * 5,460 = DL \: rate \: variance`

efficiency (2,340)

`(5,200-5,460) * 9 = DL \: efficiency \: variance`