Investigation of Variances Madison Company uses the following rule to determine whether direct labor efficiency variances ought to be investigated. A direct labor efficiency variance will be investigated anytime the amount exceeds the lesser of $12,000 or 10 percent of the standard labor cost. Reports for the past five weeks provided the following information: Week 1 2 3 4 Week 3: Week 4: LEV $ 14,000 F 15,600 U 12,000 F 10,000 U 11,500 U 5 Required: Using the rule provided, identify the cases that will be investigated. Week 1: Week 2: Week 5:1 Standard Labor Cost $160,000 175,000 160,000 170,000 110,000
Investigation of Variances Madison Company uses the following rule to determine whether direct labor efficiency variances ought to be investigated. A direct labor efficiency variance will be investigated anytime the amount exceeds the lesser of $12,000 or 10 percent of the standard labor cost. Reports for the past five weeks provided the following information: Week 1 2 3 4 Week 3: Week 4: LEV $ 14,000 F 15,600 U 12,000 F 10,000 U 11,500 U 5 Required: Using the rule provided, identify the cases that will be investigated. Week 1: Week 2: Week 5:1 Standard Labor Cost $160,000 175,000 160,000 170,000 110,000
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Investigation of Variances
Madison Company uses the following rule to determine whether direct labor efficiency variances ought to be investigated. A direct labor efficiency variance will be
investigated anytime the amount exceeds the lesser of $12,000 or 10 percent of the standard labor cost. Reports for the past five weeks provided the following
information:
Week
1
2
3
4
5
Required:
Using the rule provided, identify the cases that will be investigated.
Week 1:
Week 2:1
Week 3:
Week 4:
Week 5:
LEV
$ 14,000 F
15,600 U
12,000 F
10,000 U
11,500 U
Standard Labor Cost
$160,000
175,000
160,000
170,000
110,000
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