27 Skipped Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms x $12.00/kilogram) = $60.00/unit; direct labor (3.5 hours/unit * $20.00/hour) = $70.00/unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December: In-process beginning inventory In-process ending inventory-80% complete as to labor Units completed during the period Budgeted output Purchases of materials (in kilograms) Total actual direct labor cost incurred Direct labor hours worked (AQ) Materials purchase-price variance. Increase in materials inventory in December None 960 units 6,700 units 7,200 units 40,000 $528,410 $ 26,500 hours 1,600 favorable 1,550 kilograms The direct labor flexible-budget variance for December (rounded to the nearest dollar) was:
27 Skipped Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms x $12.00/kilogram) = $60.00/unit; direct labor (3.5 hours/unit * $20.00/hour) = $70.00/unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December: In-process beginning inventory In-process ending inventory-80% complete as to labor Units completed during the period Budgeted output Purchases of materials (in kilograms) Total actual direct labor cost incurred Direct labor hours worked (AQ) Materials purchase-price variance. Increase in materials inventory in December None 960 units 6,700 units 7,200 units 40,000 $528,410 $ 26,500 hours 1,600 favorable 1,550 kilograms The direct labor flexible-budget variance for December (rounded to the nearest dollar) was:
Chapter1: Financial Statements And Business Decisions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:27
Skipped
The direct labor flexible-budget variance for December (rounded to the nearest dollar) was:
Multiple Choice
$1,590 favorable.
$7,040 unfavorable.
$9,830 unfavorable.
$5,650 unfavorable.
Transcribed Image Text:27
Skipped
Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its
single product are as follows: Materials (5 kilograms x $12.00/kilogram) = $60.00/unit; direct labor (3.5 hours/unit * $20.00/hour) =
$70.00/unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records
for December:
In-process beginning inventory
In-process ending inventory-80% complete as to labor
Units completed during the period
Budgeted output
Purchases of materials (in kilograms)
Total actual direct labor cost incurred
Direct labor hours worked (AQ)
Materials purchase-price variance.
Increase in materials inventory in December
None
960 units
6,700 units
7,200 units
40,000
$528,410
$
26,500 hours
1,600 favorable
1,550 kilograms
The direct labor flexible-budget variance for December (rounded to the nearest dollar) was:
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Step 1: Introducing Direct Labour Variance
VIEWStep 2: Calculate the Equivalent units production for Direct Labour
VIEWStep 3: Calculate the Standard Direct Labor Cost for actual equivalent Production units
VIEWStep 4: Calculate the Direct Labour Flexible Budget Variance for December
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