Acme Company's production budget for August is 18,900 units and includes the following component unit costs: direct materials, $7.20; direct labor, $11.40; variable overhead, $5.40. Budgeted fixed overhead is $46,000. Actual production in August was 21,840 units. Actual unit component costs incurred during August include direct materials, $9.60; direct labor, $10.80; variable overhead, $6.20. Actual fixed overhead was $48,900. The standard direct labor cost per unit consists of 0.5 hour of labor time at $22.8 per hour. During August, $235,872 of actual labor cost was incurred for 9,360 direct labor hours. Required: Calculate the labor rate variance and labor efficiency variance for August. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Labor rate variance Labor efficiency variance U F
Acme Company's production budget for August is 18,900 units and includes the following component unit costs: direct materials, $7.20; direct labor, $11.40; variable overhead, $5.40. Budgeted fixed overhead is $46,000. Actual production in August was 21,840 units. Actual unit component costs incurred during August include direct materials, $9.60; direct labor, $10.80; variable overhead, $6.20. Actual fixed overhead was $48,900. The standard direct labor cost per unit consists of 0.5 hour of labor time at $22.8 per hour. During August, $235,872 of actual labor cost was incurred for 9,360 direct labor hours. Required: Calculate the labor rate variance and labor efficiency variance for August. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Labor rate variance Labor efficiency variance U F
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Acme Company's production budget for August is 18,900 units and includes the following component unit costs: direct materials,
$7.20; direct labor, $11.40; variable overhead, $5.40. Budgeted fixed overhead is $46,000. Actual production in August was 21,840
units. Actual unit component costs incurred during August include direct materials, $9.60; direct labor, $10.80; variable overhead,
$6.20. Actual fixed overhead was $48,900. The standard direct labor cost per unit consists of 0.5 hour of labor time at $22.8 per hour.
During August, $235,872 of actual labor cost was incurred for 9,360 direct labor hours.
Required:
Calculate the labor rate variance and labor efficiency variance for August.
Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero
variance).
Labor rate variance
Labor efficiency variance
F
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