Answered: Mom’s Apple Pie Company uses a standard…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Mom’s Apple Pie Company uses a standard cost system. The standard direct labor time for each pie is 30 minutes. During the most recent month, the company produced and sold 4,100 pies. The standard direct labor rate is $14.20 per hour; the actual labor rate per hour for the month was $13.90. The company used a total of 2,060 labor hours.

What was the direct labor efficiency variance for the month? Was this variance favorable (F) or unfavorable (U)? (Do not round intermediate calculations.)

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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