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 80 of its most popular item, the Breakfast Enchilada. The following data are available for that day: Quantity of direct labor used 16 hrs. (2 employees, working 8 hour shifts) Actual rate for direct labor $13.20 per hr. Standard direct labor per meal 0.1 hr. Standard rate for direct labor $13.70 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. Open spreadsheet 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 the nearest cent. Direct Labor Rate Variance $ Direct Labor Time Variance $ Direct Labor Cost Variance $ 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.
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.
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 80 of its most popular item, the Breakfast Enchilada. The following data are available for that day:
| Quantity of direct labor used | 16 hrs. |
| (2 employees, working 8 hour shifts) | |
| Actual rate for direct labor | $13.20 per hr. |
| Standard direct labor per meal | 0.1 hr. |
| Standard rate for direct labor | $13.70 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.
-
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 the nearest cent.
Direct Labor Rate Variance $ Direct Labor Time Variance $ Direct Labor Cost Variance $ -
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.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
