What was the adverse labour efficiency planning variance for July?$86,400$77,760$93,960$97,200Close All P Fla Mugg Co makes hand painted mugs exclusively for an expensive chain of retailstores. The mugs are made and painted in batches. Standards are set at thebeginning of each year and in January, the standard time and labour cost per batchof mugs were set at:Time per batch6.7 hours$24Labour cost per hour (set by head office)JuneIn June, the labour force had to learn how to paint a more complicated design due toa request from the retail chain. The first batch of mugs with the new design wasexpected to take 14.1 hours and an 85% learning curve was expected to apply forthe first eight batches, after which the learning effect would end. Each batch after theeighth batch was expected to take 8.5 hours. The budgeted production for June was1,000 batches.JulyIn July, the standard time per batch was revised to 8.5 hours and productioninformation was as follows:Budgeted production1,700 batchesActual production1,800 batchesActual labour time15,660 hoursActual labour cost$30 per hourAugustThe labour variances for August were as follows:Planning variance($)Operational variance($)Labour rate2,880 Adverse0Labour efficiency024,000 Favourable

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What was the adverse labour efficiency planning variance for July? $86,400 © $77,760 $93,960 $97,200

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question

What was the adverse labour efficiency planning variance for July?
$86,400
$77,760
$93,960
$97,200
Close All P Fla

Mugg Co makes hand painted mugs exclusively for an expensive chain of retail
stores. The mugs are made and painted in batches. Standards are set at the
beginning of each year and in January, the standard time and labour cost per batch
of mugs were set at:
Time per batch
6.7 hours
$24
Labour cost per hour (set by head office)
June
In June, the labour force had to learn how to paint a more complicated design due to
a request from the retail chain. The first batch of mugs with the new design was
expected to take 14.1 hours and an 85% learning curve was expected to apply for
the first eight batches, after which the learning effect would end. Each batch after the
eighth batch was expected to take 8.5 hours. The budgeted production for June was
1,000 batches.
July
In July, the standard time per batch was revised to 8.5 hours and production
information was as follows:
Budgeted production
1,700 batches
Actual production
1,800 batches
Actual labour time
15,660 hours
Actual labour cost
$30 per hour
August
The labour variances for August were as follows:
Planning variance
($)
Operational variance
($)
Labour rate
2,880 Adverse
0
Labour efficiency
0
24,000 Favourable

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