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The Outdoor Vest company has provided the following information about their product Budget or standard information Male Female Standard material used for each vest Liner 7.0 yards 4.0 pounds 9.4 Filler 5.2 Standard direct labor hours for each vest 0.4 hours 0.5 Estimated planned production 6,200 5,000 Units Standard labor rate $14.00 per hour Standard material cost $8.00 per yard $2.00 per pound Liner Filler Actual information Male Female Actual units produced 5,800 4,400 Actual labor hours worked 2,800 1,825 Actual labor rate $14.50 $14.70 Actual material purchased and used Liner 85,100 yards Filler 48,000 pounds Actual material cost per item Liner $8.20 Per yard Filler $1.90 Per pound ЗА In your own words explain the purpose of the direct labor efficiency variance.

The Outdoor Vest company has provided the following information about their product Budget or standard information Male Female Standard material used for each vest Liner 7.0 yards 4.0 pounds 9.4 Filler 5.2 Standard direct labor hours for each vest 0.4 hours 0.5 Estimated planned production 6,200 5,000 Units Standard labor rate $14.00 per hour Standard material cost $8.00 per yard $2.00 per pound Liner Filler Actual information Male Female Actual units produced 5,800 4,400 Actual labor hours worked 2,800 1,825 Actual labor rate $14.50 $14.70 Actual material purchased and used Liner 85,100 yards Filler 48,000 pounds Actual material cost per item Liner $8.20 Per yard Filler $1.90 Per pound ЗА In your own words explain the purpose of the direct labor efficiency variance.

FINANCIAL ACCOUNTING
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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The Outdoor Vest company has provided the following information about their product Budget or standard information Male Female Standard material used for each vest Liner 9.4 7.0 yards Filler 5.2 4.0 pounds Standard direct labor hours for each vest 0.4 hours 0.5 Estimated planned production 6,200 5,000 Units Standard labor rate $14.00 per hour Standard material cost Liner $8.00 per yard Filler $2.00 per pound Actual information Male Female Actual units produced 5,800 4,400 Actual labor hours worked 2,800 1,825 Actual labor rate $14.50 $14.70 Actual material purchased and used 85,100 yards 48,000 pounds Liner Filler Actual material cost per item Liner $8.20 Per yard $1.90 Per pound Filler In your own words explain the purpose of the direct labor efficiency variance. ЗА Available resources, Excel worksheet from class, recording, textbook
Transcribed Image Text:The Outdoor Vest company has provided the following information about their product Budget or standard information Male Female Standard material used for each vest Liner 9.4 7.0 yards Filler 5.2 4.0 pounds Standard direct labor hours for each vest 0.4 hours 0.5 Estimated planned production 6,200 5,000 Units Standard labor rate $14.00 per hour Standard material cost Liner $8.00 per yard Filler $2.00 per pound Actual information Male Female Actual units produced 5,800 4,400 Actual labor hours worked 2,800 1,825 Actual labor rate $14.50 $14.70 Actual material purchased and used 85,100 yards 48,000 pounds Liner Filler Actual material cost per item Liner $8.20 Per yard $1.90 Per pound Filler In your own words explain the purpose of the direct labor efficiency variance. ЗА Available resources, Excel worksheet from class, recording, textbook
Expert Solution
Step 1

Direct labor efficiency variance:

Direct labor efficiency variance is found to analyze and check which area of the production process is using more direct labor hours than anticipated, it is helpful to find reasons and resolve major issues if any and it helps to prepare future budgets efficiently.

Direct labor efficiency variance helps to understand the ability of an entity to utilize labor in accordance with expectations.

Direct labor efficiency variance is computed using the following formula

Direct labor efficiency variance = (Actual hours * Standard rate) - (Standard hours * Standard rate)

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