Affordable Electronics Inc. manufactures medium-quality, reasonably priced wireless speakers for home use. The company uses standards to control its costs. The labour standards that have been set for one speaker are as follows: Standard Hours 18 minutes (0.30 hours) During July, 7,150 hours of direct labour time were recorded to make 23,000 units. The direct labour cost totalled $91,520 for the month. Direct labour cost Required: 1-a. What direct labour cost should have been incurred to make the 23,000 speakers? (Do not round intermediate calculations.) Standard Rate per Hour $12.00 Total variance $ Standard Cost $3.60 Labour rate variance Labour efficiency variance 79,200 1-b. By how much does direct labour cost differ from the cost that was incurred? (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) 2. Break down the difference in cost from requirement 1-b above into a labour rate variance and a labour efficiency variance. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
Affordable Electronics Inc. manufactures medium-quality, reasonably priced wireless speakers for home use. The company uses standards to control its costs. The labour standards that have been set for one speaker are as follows: Standard Hours 18 minutes (0.30 hours) During July, 7,150 hours of direct labour time were recorded to make 23,000 units. The direct labour cost totalled $91,520 for the month. Direct labour cost Required: 1-a. What direct labour cost should have been incurred to make the 23,000 speakers? (Do not round intermediate calculations.) Standard Rate per Hour $12.00 Total variance $ Standard Cost $3.60 Labour rate variance Labour efficiency variance 79,200 1-b. By how much does direct labour cost differ from the cost that was incurred? (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) 2. Break down the difference in cost from requirement 1-b above into a labour rate variance and a labour efficiency variance. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Topic Video
Question
answer in text form please (without image)
Transcribed Image Text:Affordable Electronics Inc. manufactures medium-quality, reasonably priced wireless speakers for home use. The
company uses standards to control its costs. The labour standards that have been set for one speaker are as
follows:
Standard Hours
18 minutes (0.30 hours)
During July, 7,150 hours of direct labour time were recorded to make 23,000 units. The direct labour cost totalled
$91,520 for the month.
Direct labour cost
Standard Rate
per Hour
$12.00
Required:
1-a. What direct labour cost should have been incurred to make the 23,000 speakers? (Do not round intermediate
calculations.)
Total variance
Standard
Cost
$3.60
$ 79,200
1-b. By how much does direct labour cost differ from the cost that was incurred? (Indicate the effect of variance by
selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
Labour rate variance
Labour efficiency variance
2. Break down the difference in cost from requirement 1-b above into a labour rate variance and a labour efficiency
variance. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None"
for no effect (i.e., zero variance).)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education