Benson's Doll Company produces handmade dolls. The standard amount of time spent on each doll is 1.50 hours. The standard cost of labor is $7.68 per hour. The company planned to make 7,700 dolls during the year but actually used 12,250 hours of labor to make 9,000 dolls. The payroll amounted to $97,388. Required a. Should labor variances be based on the planned volume of 7,700 dolls or the actual volume of 9,000 dolls? b. Prepare a table that shows the standard labor price, the actual labor price, the standard labor hours, and the actual labor hours. c. Compute the labor price variance and indicate whether it is favorable (F) or unfavorable (U). d. Compute the labor usage variance and indicate whether it is favorable (F) or unfavorable (U). Complete this question by entering your answers in the tabs below. Req A Reg B Reg C and D Prepare a table that shows the standard labor price, the actual labor price, the standard labor hours, and the actual labor hours. (Round "Standard price" and "Actual price" to 2 decimal places.) Labor Variance Information Table Standard labor price per hour Actual price per hour Standard hours for flexible budget Actual hours used < Req A Req C and D >

Benson's Doll Company produces handmade dolls. The standard amount of time spent on each doll is 1.50 hours. The standard cost of labor is $7.68 per hour. The company planned to make 7,700 dolls during the year but actually used 12,250 hours of labor to make 9,000 dolls. The payroll amounted to $97,388. Required a. Should labor variances be based on the planned volume of 7,700 dolls or the actual volume of 9,000 dolls? b. Prepare a table that shows the standard labor price, the actual labor price, the standard labor hours, and the actual labor hours. c. Compute the labor price variance and indicate whether it is favorable (F) or unfavorable (U). d. Compute the labor usage variance and indicate whether it is favorable (F) or unfavorable (U). Complete this question by entering your answers in the tabs below. Req A Reg B Reg C and D Prepare a table that shows the standard labor price, the actual labor price, the standard labor hours, and the actual labor hours. (Round "Standard price" and "Actual price" to 2 decimal places.) Labor Variance Information Table Standard labor price per hour Actual price per hour Standard hours for flexible budget Actual hours used < Req A Req C and D >

Name: Benson's Doll Company produces handmade dolls. The standard amount of
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Description: Benson's Doll Company produces handmade dolls. The standard amount of time spent on each doll is 1.50 hours. The standard cost oflabor is $7.68 per hour. The company planned to make 7,700 dolls during the year but actually used 12,250 hours of labor

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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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.

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Question

Benson's Doll Company produces handmade dolls. The standard amount of time spent on each doll is 1.50 hours. The standard cost of
labor is $7.68 per hour. The company planned to make 7,700 dolls during the year but actually used 12,250 hours of labor to make
9,000 dolls. The payroll amounted to $97,388.
Required
a. Should labor variances be based on the planned volume of 7,700 dolls or the actual volume of 9,000 dolls?
b. Prepare a table that shows the standard labor price, the actual labor price, the standard labor hours, and the actual labor hours.
c. Compute the labor price variance and indicate whether it is favorable (F) or unfavorable (U).
d. Compute the labor usage variance and indicate whether it is favorable (F) or unfavorable (U).
Complete this question by entering your answers in the tabs below.
Req A
Req B
Req C and D
Prepare a table that shows the standard labor price, the actual labor price, the standard labor hours, and the actual labor
hours. (Round "Standard price" and "Actual price" to 2 decimal places.)
Labor Variance Information Table
Standard labor price
per hour
Actual price
per hour
Standard hours for flexible budget
Actual hours used
< Req A
Req C and D >

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