Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Direct materials (plastic) Direct labor Variable nanufacturing overhead (based on direct labor hours) Fixed manufacturing overhead (s500,040 926,000 units) Parker Plastic had the following actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,200,000 12,200,000 $7,320,000 324,000 $3,855,600 $1,300,000 $381,000 Direct Labor Rate Variance Direct Labor Efficiency Vinance Standard Quantity 13 square foot 0.25 hour 0.25 hour Standard Price (Rate). $ 0.70 per square foot $ 12.20 per hour $ 1.40 per hour Required: Calculate Parker Plastic's direct labor rate and efficiency variances Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Standard Unit Cost $ 9.10 3.05 0.35 0.54

Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Direct materials (plastic) Direct labor Variable nanufacturing overhead (based on direct labor hours) Fixed manufacturing overhead (s500,040 926,000 units) Parker Plastic had the following actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,200,000 12,200,000 $7,320,000 324,000 $3,855,600 $1,300,000 $381,000 Direct Labor Rate Variance Direct Labor Efficiency Vinance Standard Quantity 13 square foot 0.25 hour 0.25 hour Standard Price (Rate). $ 0.70 per square foot $ 12.20 per hour $ 1.40 per hour Required: Calculate Parker Plastic's direct labor rate and efficiency variances Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Standard Unit Cost $ 9.10 3.05 0.35 0.54

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Description: Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last yearfollows:Direct materials (plastic)Direct laborVariable manufacturing overhead (based on direct labor hours)Fixed ma

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

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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Question

Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year
follows:
Direct materials (plastic)
Direct labor
Variable manufacturing overhead (based on direct labor hours)
Fixed manufacturing overhead ($500,040 926,000 units)
Parker Plastic had the following actual results for the past year:
Number of units produced and sold
Number of square feet of plastic used
Cost of plastic purchased and used
Number of Labor hours worked
Direct labor cost
Variable overhead cost
Fixed overhead cost
1.200,000
12,200,000
$7,320,000
324,000
$3,855,600
$1,300,000
$ 381,000
Required:
Calculate Parker Plastic's direct labor rate and efficiency variances
Direct Labor Rate Variance
Direct Labor Efficiency Vince
Standard Quantity
13 square foot
0.25 hour
0.25 hour
Standard Price (Rate)
$ 0.70 per square foot
$ 12.20 per hour
$ 1.40 per hour
Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for
unfavorable, and "None" for no effect (.e., zero variance).
Check my work
Standard Unit
Cost
$9.10
3.05
0.35
0.54

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