Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 24 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 970 oil changes. Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June: Actual number of oil changes performed: 970 Actual number of direct labor hours worked: 384 hours Actual rate paid per direct labor hour: $15.00 Standard rate per direct labor hour: $14.50 Required: Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June using the formula approach. Direct labor rate variance (LRV) Direct labor efficiency variance (LEV) S Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June. Direct labor rate variance (LRV) Direct labor efficiency variance (LEV) S Calculate the total direct labor variance for oil changes for June. What if the actual wage rate paid in June was $14.00? What impact would that have had on the direct labor rate variance (LRV)? On the direct labor efficiency variance (LEV)? Indicate what the new variances wou be below. If required, round your answers to the nearest cent. Direct labor rate variance (LRV): s Direct labor efficiency variance (LEV):
Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 24 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 970 oil changes. Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June: Actual number of oil changes performed: 970 Actual number of direct labor hours worked: 384 hours Actual rate paid per direct labor hour: $15.00 Standard rate per direct labor hour: $14.50 Required: Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June using the formula approach. Direct labor rate variance (LRV) Direct labor efficiency variance (LEV) S Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June. Direct labor rate variance (LRV) Direct labor efficiency variance (LEV) S Calculate the total direct labor variance for oil changes for June. What if the actual wage rate paid in June was $14.00? What impact would that have had on the direct labor rate variance (LRV)? On the direct labor efficiency variance (LEV)? Indicate what the new variances wou be below. If required, round your answers to the nearest cent. Direct labor rate variance (LRV): s Direct labor efficiency variance (LEV):
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 24 minutes and 6.2
quarts of oil are used. In June, Guillermo's Oil and Lube had 970 oil changes.
Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June:
Actual number of oil changes performed: 970
Actual number of direct labor hours worked: 384 hours
Actual rate paid per direct labor hour: $15.00
Standard rate per direct labor hour: $14.50
Required:
Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June using the formula approach.
Direct labor rate variance (LRV)
Direct labor efficiency variance (LEV) S
Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June.
Direct labor rate variance (LRV)
Direct labor efficiency variance (LEV) S
Calculate the total direct labor variance for oil changes for June.
What if the actual wage rate paid in June was $14.00? What impact would that have had on the direct labor rate variance (LRV)? On the direct labor efficiency variance (LEV)? Indicate what the new variances would
be below. If required, round your answers to the nearest cent.
Direct labor rate variance (LRV):
Direct labor efficiency variance (LEV):
s
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Step 1: Define rate variances
VIEWStep 2: a) The calculation of the labor rate variance and labor efficiency variance is as follows-
VIEWStep 3: c) The calculation of the total direct labor variance is as follows-
VIEWStep 4: d) The calculation of the labor rate variance and labor efficiency variance is as follows-
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