Answered: 2. Queen Industries uses a standard…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

2. Queen Industries uses a standard costing system in the manufacturing of its single product. It requires 2 hours of labor to produce 1 unit of final product. In February, Queen Industries produced 12,000 units. The standard cost for labor allowed for the output was $90,000, and there was an unfavorable direct labor time variance of $5,520 (HINT - this is helpful to solve the problem).

NOTE: All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). For the variance conditions, your answer is either "F” (for Favorable) or "U” (for Unfavorable) - capital letter and no quotes.

What was the standard rate per hour ? standard rate per hour. (with "$" round answer to two decimal places with commas as needed)
If the workers were paid $3.90 per hour, how many actual hours were worked ? actual hours. (round answer to whole number with commas as needed)
Complete the following table of variances and their conditions:

Variance	Variance Amount	Favorable (F) or Unfavorable (U)
Labor Rate	?	?
Labor Time	?	?
Total DL Cost Variance	?	?

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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