Exercise 3 Lunch Co. makes sandwiches for convenience stores. Last month, it made 3500 sandwiches using 140 direct labor hours. It paid its employees a total of $1134. According to company standards, employees should make 20 sandwiches per hour and be paid $9 per hour. What is the actual labor rate? What is the standard hours allowed for the number of sandwiches made? What is the amount of labor rate (price) variance? Is the MPV favorable or unfavorable? What is the amount of labor efficiency (quantity) variance? Is the MQV favorable or unfavorable? $8.10 X X
Exercise 3 Lunch Co. makes sandwiches for convenience stores. Last month, it made 3500 sandwiches using 140 direct labor hours. It paid its employees a total of $1134. According to company standards, employees should make 20 sandwiches per hour and be paid $9 per hour. What is the actual labor rate? What is the standard hours allowed for the number of sandwiches made? What is the amount of labor rate (price) variance? Is the MPV favorable or unfavorable? What is the amount of labor efficiency (quantity) variance? Is the MQV favorable or unfavorable? $8.10 X X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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Exercise 3
18
21
Lunch Co. makes sandwiches for convenience stores. Last month, it made 3500 sandwiches using 140 direct labor
hours. It paid its employees a total of $1134. According to company standards, employees should make 20
sandwiches per hour and be paid $9 per hour.
What is the actual labor rate?
$8.10
23
What is the standard hours allowed for the number of sandwiches made?
25
20
27
PC
29
J5
31
32
What is the amount of labor rate (price) variance?
Is the MPV favorable or unfavorable?
What is the amount of labor efficiency (quantity) variance?
Is the MQV favorable or unfavorable?
X
X
X
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