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At a recent seminar you attended, the invited speaker was discus erms of evaluating performance and motivating goal-congruent behavior on the part of employees. One criticism of standa articular caught your attention: The use of conventional standard costs may not provide appropriate incentives for improve eeded to compete effectively with world-class organizations. The speaker then discussed so-called continuous-improvem tandard costs. Such standards embody systematically lower costs over time. For example, on a monthly basis, it might be a budget a 1.0% reduction in per-unit direct labor cost. Assume that the standard wage rate into the foreseeable future is $26 per hour. Assume, too, that the budgeted labor-hour or October of the current year is 3.10 hours and that this standard is reduced each month by 1%. During December of the c The company produced 6,400 units of XL-10, using 23,000 direct labor hours. The actual wage rate per hour in December w Required: Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the October through January.

At a recent seminar you attended, the invited speaker was discus erms of evaluating performance and motivating goal-congruent behavior on the part of employees. One criticism of standa articular caught your attention: The use of conventional standard costs may not provide appropriate incentives for improve eeded to compete effectively with world-class organizations. The speaker then discussed so-called continuous-improvem tandard costs. Such standards embody systematically lower costs over time. For example, on a monthly basis, it might be a budget a 1.0% reduction in per-unit direct labor cost. Assume that the standard wage rate into the foreseeable future is $26 per hour. Assume, too, that the budgeted labor-hour or October of the current year is 3.10 hours and that this standard is reduced each month by 1%. During December of the c The company produced 6,400 units of XL-10, using 23,000 direct labor hours. The actual wage rate per hour in December w Required: Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the October through January.

FINANCIAL ACCOUNTING
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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At a recent seminar you attended, the invited speaker was discussing some of the advantages and disadvantages of standard costs in terms of evaluating performance and motivating goal-congruent behavior on the part of employees. One criticism of standard costs in particular caught your attention: The use of conventional standard costs may not provide appropriate incentives for improvements needed to compete effectively with world-class organizations. The speaker then discussed so-called continuous-improvement standard costs. Such standards embody systematically lower costs over time. For example, on a monthly basis, it might be appropriate to budget a 1.0% reduction in per-unit direct labor cost. Assume that the standard wage rate into the foreseeable future is $26 per hour. Assume, too, that the budgeted labor-hour standard for October of the current year is 3.10 hours and that this standard is reduced each month by 1%. During December of the current year the company produced 6,400 units of XL-10, using 23,000 direct labor hours. The actual wage rate per hour in December was $28.00. Required: 1. Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the 4 months, October through January. 2. Compute the direct labor efficiency variance for December. Was this variance favorable or unfavorable? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the 4 months, October through January. (Do not round intermediate calculations. Round your "Standard Direct Labor Cost/Unit" answers to 2 decimal places and "Standard Labor-Hour Requirement/Unit" answers to 5 decimal places.) Standard Labor-Hour Requirement/Unit hour per unit Standard Direct Labor Cost/Unit Month October November hour per unit December hour per unit January hour per unit Required 2 >
Transcribed Image Text:At a recent seminar you attended, the invited speaker was discussing some of the advantages and disadvantages of standard costs in terms of evaluating performance and motivating goal-congruent behavior on the part of employees. One criticism of standard costs in particular caught your attention: The use of conventional standard costs may not provide appropriate incentives for improvements needed to compete effectively with world-class organizations. The speaker then discussed so-called continuous-improvement standard costs. Such standards embody systematically lower costs over time. For example, on a monthly basis, it might be appropriate to budget a 1.0% reduction in per-unit direct labor cost. Assume that the standard wage rate into the foreseeable future is $26 per hour. Assume, too, that the budgeted labor-hour standard for October of the current year is 3.10 hours and that this standard is reduced each month by 1%. During December of the current year the company produced 6,400 units of XL-10, using 23,000 direct labor hours. The actual wage rate per hour in December was $28.00. Required: 1. Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the 4 months, October through January. 2. Compute the direct labor efficiency variance for December. Was this variance favorable or unfavorable? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the 4 months, October through January. (Do not round intermediate calculations. Round your "Standard Direct Labor Cost/Unit" answers to 2 decimal places and "Standard Labor-Hour Requirement/Unit" answers to 5 decimal places.) Standard Labor-Hour Requirement/Unit hour per unit Standard Direct Labor Cost/Unit Month October November hour per unit December hour per unit January hour per unit Required 2 >
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