Direct Labor Variances for a Service Company Mexicali On the Go Inc. owns and operates food trucks (mobile kitchens) throughout the west coast. The company's employees have varying wage levels depending on their experience and length of time with the company. Employees work 8-hour shifts and are assigned to a truck each day based on labor needs to support the daily menu. One of its trucks, Donna's Mobile Fiesta offers a single menu item that changes daily. On May 6, the truck prepared 60 of its most popular item, the Breakfast Enchilada. The following data are available for that day: Quantity of direct labor used (2 employees, working 8-hour shifts) Actual rate for direct labor 16 hrs. $14.50 per hr. 0.2 hr. $15.10 per hr. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Standard direct labor per meal Standard rate for direct labor Open spreadsheet a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your answers to two decimal places. Direct Labor Rate Variance Direct Labor Time Variance Total Direct Labor Cost Variance b. Discuss what might have caused these variances. Unfavorable time variance will occur any time the number of meals actually made number of meals that could be generated by employees in the mobile kitchen.
Direct Labor Variances for a Service Company Mexicali On the Go Inc. owns and operates food trucks (mobile kitchens) throughout the west coast. The company's employees have varying wage levels depending on their experience and length of time with the company. Employees work 8-hour shifts and are assigned to a truck each day based on labor needs to support the daily menu. One of its trucks, Donna's Mobile Fiesta offers a single menu item that changes daily. On May 6, the truck prepared 60 of its most popular item, the Breakfast Enchilada. The following data are available for that day: Quantity of direct labor used (2 employees, working 8-hour shifts) Actual rate for direct labor 16 hrs. $14.50 per hr. 0.2 hr. $15.10 per hr. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Standard direct labor per meal Standard rate for direct labor Open spreadsheet a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your answers to two decimal places. Direct Labor Rate Variance Direct Labor Time Variance Total Direct Labor Cost Variance b. Discuss what might have caused these variances. Unfavorable time variance will occur any time the number of meals actually made number of meals that could be generated by employees in the mobile kitchen.
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:Direct Labor Variances for a Service Company
Mexicali On the Go Inc. owns and operates food trucks (mobile kitchens) throughout the west coast. The company's employees have varying wage levels depending on their experience and length of time with the
company. Employees work 8-hour shifts and are assigned to a truck each day based on labor needs to support the daily menu. One of its trucks, Donna's Mobile Fiesta offers a single menu item that changes daily. On
May 6, the truck prepared 60 of its most popular item, the Breakfast Enchilada. The following data are available for that day:
Quantity of direct labor used
(2 employees, working 8-hour shifts)
Actual rate for direct labor
16 hrs.
$14.50 per hr.
0.2 hr.
$15.10 per hr.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
Standard direct labor per meal
Standard rate for direct labor
Open spreadsheet
a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive
number. Round your answers to two decimal places.
Direct Labor Rate Variance
Direct Labor Time Variance
Total Direct Labor Cost Variance
b. Discuss what might have caused these variances.
Unfavorable time variance will occur any time the number of meals actually made
number of meals that could be generated by employees in the mobile kitchen.
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