Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products. Direct labor efficiency variance- Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable. Direct labor rate variance- Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable. Requirement 1- To complete: Performance report.

Question

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Answer 1

Question

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 15, Problem 15.10E

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 1-

To complete:

Performance report.

Expert Solution

Answer to Problem 15.10E

	Flexible Budget	Actual	Budget Variance
Direct labor	$1,380	$1,573	$193 U

Explanation of Solution

Given,

Actual production of stamping = 230,000
Standard stampings per hour = 2,000
Standard rate per hour = $12
Actual direct labor cost = $1,573

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Budgeted direct labor cost = Standard hours for actual production * Standard rate per hourBudgeted direct labor cost = 115 hours * $12Budgeted direct labor cost = $1,380

Budget variance is calculated as follows-

Budget variance = Actual direct labor cost – Budgeted direct labor costBudget variance = $1,573 − $1,380Budget variance = $193 U

Conclusion:

Thus, performance report is computed.

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 2-

To calculate:

Direct labor efficiency variance and direct labor rate variance.

Expert Solution

Answer to Problem 15.10E

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Explanation of Solution

Direct labor efficiency variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Direct labor efficiency variance is calculated as follows-

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours
Actual labor cost = $1,573

Actual rate = Actual labor cost / Actual hours workedActual rate = $1,573 / 121Actual rate = $13

Direct labor rate variance is calculated as follows-

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Conclusion:

Under direct labor efficiency variance, since standard hours are less than the actual works worked, hence variance is unfavorable.

Under direct labor rate variance, since standard rate is less than the actual rate, hence variance is unfavorable.

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 3-

To determine which alternative would improve control over stamping department's direct labor.

Expert Solution

Answer to Problem 15.10E

Including the direct labor rate variance and direct labor efficiency variance separately in the monthly report would improve the control over stamping department's direct labor. The variance needs to be clearly classified into rate and efficiency variance so that department personnel understand it in better way.

Explanation of Solution

Answer explained above.

Conclusion:

Thus, answer is explained.

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Answer 2

Question

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 15, Problem 15.10E

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 1-

To complete:

Performance report.

Expert Solution

Answer to Problem 15.10E

	Flexible Budget	Actual	Budget Variance
Direct labor	$1,380	$1,573	$193 U

Explanation of Solution

Given,

Actual production of stamping = 230,000
Standard stampings per hour = 2,000
Standard rate per hour = $12
Actual direct labor cost = $1,573

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Budgeted direct labor cost = Standard hours for actual production * Standard rate per hourBudgeted direct labor cost = 115 hours * $12Budgeted direct labor cost = $1,380

Budget variance is calculated as follows-

Budget variance = Actual direct labor cost – Budgeted direct labor costBudget variance = $1,573 − $1,380Budget variance = $193 U

Conclusion:

Thus, performance report is computed.

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 2-

To calculate:

Direct labor efficiency variance and direct labor rate variance.

Expert Solution

Answer to Problem 15.10E

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Explanation of Solution

Direct labor efficiency variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Direct labor efficiency variance is calculated as follows-

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours
Actual labor cost = $1,573

Actual rate = Actual labor cost / Actual hours workedActual rate = $1,573 / 121Actual rate = $13

Direct labor rate variance is calculated as follows-

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Conclusion:

Under direct labor efficiency variance, since standard hours are less than the actual works worked, hence variance is unfavorable.

Under direct labor rate variance, since standard rate is less than the actual rate, hence variance is unfavorable.

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 3-

To determine which alternative would improve control over stamping department's direct labor.

Expert Solution

Answer to Problem 15.10E

Including the direct labor rate variance and direct labor efficiency variance separately in the monthly report would improve the control over stamping department's direct labor. The variance needs to be clearly classified into rate and efficiency variance so that department personnel understand it in better way.

Explanation of Solution

Answer explained above.

Conclusion:

Thus, answer is explained.

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Answer 3

Question

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 15, Problem 15.10E

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 1-

To complete:

Performance report.

Expert Solution

Answer to Problem 15.10E

	Flexible Budget	Actual	Budget Variance
Direct labor	$1,380	$1,573	$193 U

Explanation of Solution

Given,

Actual production of stamping = 230,000
Standard stampings per hour = 2,000
Standard rate per hour = $12
Actual direct labor cost = $1,573

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Budgeted direct labor cost = Standard hours for actual production * Standard rate per hourBudgeted direct labor cost = 115 hours * $12Budgeted direct labor cost = $1,380

Budget variance is calculated as follows-

Budget variance = Actual direct labor cost – Budgeted direct labor costBudget variance = $1,573 − $1,380Budget variance = $193 U

Conclusion:

Thus, performance report is computed.

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 2-

To calculate:

Direct labor efficiency variance and direct labor rate variance.

Expert Solution

Answer to Problem 15.10E

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Explanation of Solution

Direct labor efficiency variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Direct labor efficiency variance is calculated as follows-

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours
Actual labor cost = $1,573

Actual rate = Actual labor cost / Actual hours workedActual rate = $1,573 / 121Actual rate = $13

Direct labor rate variance is calculated as follows-

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Conclusion:

Under direct labor efficiency variance, since standard hours are less than the actual works worked, hence variance is unfavorable.

Under direct labor rate variance, since standard rate is less than the actual rate, hence variance is unfavorable.

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 3-

To determine which alternative would improve control over stamping department's direct labor.

Expert Solution

Answer to Problem 15.10E

Including the direct labor rate variance and direct labor efficiency variance separately in the monthly report would improve the control over stamping department's direct labor. The variance needs to be clearly classified into rate and efficiency variance so that department personnel understand it in better way.

Explanation of Solution

Answer explained above.

Conclusion:

Thus, answer is explained.

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Answer 4

Question

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

Chapter 15, Problem 15.10E

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 1-

To complete:

Performance report.

Expert Solution

Answer to Problem 15.10E

	Flexible Budget	Actual	Budget Variance
Direct labor	$1,380	$1,573	$193 U

Explanation of Solution

Given,

Actual production of stamping = 230,000
Standard stampings per hour = 2,000
Standard rate per hour = $12
Actual direct labor cost = $1,573

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Budgeted direct labor cost = Standard hours for actual production * Standard rate per hourBudgeted direct labor cost = 115 hours * $12Budgeted direct labor cost = $1,380

Budget variance is calculated as follows-

Budget variance = Actual direct labor cost – Budgeted direct labor costBudget variance = $1,573 − $1,380Budget variance = $193 U

Conclusion:

Thus, performance report is computed.

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 2-

To calculate:

Direct labor efficiency variance and direct labor rate variance.

Expert Solution

Answer to Problem 15.10E

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Explanation of Solution

Direct labor efficiency variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Direct labor efficiency variance is calculated as follows-

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours
Actual labor cost = $1,573

Actual rate = Actual labor cost / Actual hours workedActual rate = $1,573 / 121Actual rate = $13

Direct labor rate variance is calculated as follows-

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Conclusion:

Under direct labor efficiency variance, since standard hours are less than the actual works worked, hence variance is unfavorable.

Under direct labor rate variance, since standard rate is less than the actual rate, hence variance is unfavorable.

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 3-

To determine which alternative would improve control over stamping department's direct labor.

Expert Solution

Answer to Problem 15.10E

Including the direct labor rate variance and direct labor efficiency variance separately in the monthly report would improve the control over stamping department's direct labor. The variance needs to be clearly classified into rate and efficiency variance so that department personnel understand it in better way.

Explanation of Solution

Answer explained above.

Conclusion:

Thus, answer is explained.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 15, Problem 15.10E

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 1-

To complete:

Performance report.

Expert Solution

Answer to Problem 15.10E

	Flexible Budget	Actual	Budget Variance
Direct labor	$1,380	$1,573	$193 U

Explanation of Solution

Given,

Actual production of stamping = 230,000
Standard stampings per hour = 2,000
Standard rate per hour = $12
Actual direct labor cost = $1,573

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Budgeted direct labor cost = Standard hours for actual production * Standard rate per hourBudgeted direct labor cost = 115 hours * $12Budgeted direct labor cost = $1,380

Budget variance is calculated as follows-

Budget variance = Actual direct labor cost – Budgeted direct labor costBudget variance = $1,573 − $1,380Budget variance = $193 U

Conclusion:

Thus, performance report is computed.

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 2-

To calculate:

Direct labor efficiency variance and direct labor rate variance.

Expert Solution

Answer to Problem 15.10E

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Explanation of Solution

Direct labor efficiency variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Direct labor efficiency variance is calculated as follows-

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours
Actual labor cost = $1,573

Actual rate = Actual labor cost / Actual hours workedActual rate = $1,573 / 121Actual rate = $13

Direct labor rate variance is calculated as follows-

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Conclusion:

Under direct labor efficiency variance, since standard hours are less than the actual works worked, hence variance is unfavorable.

Under direct labor rate variance, since standard rate is less than the actual rate, hence variance is unfavorable.

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 3-

To determine which alternative would improve control over stamping department's direct labor.

Expert Solution

Answer to Problem 15.10E

Including the direct labor rate variance and direct labor efficiency variance separately in the monthly report would improve the control over stamping department's direct labor. The variance needs to be clearly classified into rate and efficiency variance so that department personnel understand it in better way.

Explanation of Solution

Answer explained above.

Conclusion:

Thus, answer is explained.

Answer 6

Chapter 15, Problem 15.10E

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 1-

To complete:

Performance report.

Expert Solution

Answer to Problem 15.10E

	Flexible Budget	Actual	Budget Variance
Direct labor	$1,380	$1,573	$193 U

Explanation of Solution

Given,

Actual production of stamping = 230,000
Standard stampings per hour = 2,000
Standard rate per hour = $12
Actual direct labor cost = $1,573

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Budgeted direct labor cost = Standard hours for actual production * Standard rate per hourBudgeted direct labor cost = 115 hours * $12Budgeted direct labor cost = $1,380

Budget variance is calculated as follows-

Budget variance = Actual direct labor cost – Budgeted direct labor costBudget variance = $1,573 − $1,380Budget variance = $193 U

Conclusion:

Thus, performance report is computed.

Answer 7

Chapter 15, Problem 15.10E

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 1-

To complete:

Performance report.

Answer 8

Expert Solution

Answer to Problem 15.10E

	Flexible Budget	Actual	Budget Variance
Direct labor	$1,380	$1,573	$193 U

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Given,

Actual production of stamping = 230,000
Standard stampings per hour = 2,000
Standard rate per hour = $12
Actual direct labor cost = $1,573

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Budgeted direct labor cost = Standard hours for actual production * Standard rate per hourBudgeted direct labor cost = 115 hours * $12Budgeted direct labor cost = $1,380

Budget variance is calculated as follows-

Budget variance = Actual direct labor cost – Budgeted direct labor costBudget variance = $1,573 − $1,380Budget variance = $193 U

Conclusion:

Thus, performance report is computed.

Answer 13

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 2-

To calculate:

Direct labor efficiency variance and direct labor rate variance.

Expert Solution

Answer to Problem 15.10E

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Explanation of Solution

Direct labor efficiency variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Direct labor efficiency variance is calculated as follows-

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours
Actual labor cost = $1,573

Actual rate = Actual labor cost / Actual hours workedActual rate = $1,573 / 121Actual rate = $13

Direct labor rate variance is calculated as follows-

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Conclusion:

Under direct labor efficiency variance, since standard hours are less than the actual works worked, hence variance is unfavorable.

Under direct labor rate variance, since standard rate is less than the actual rate, hence variance is unfavorable.

Answer 14

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 2-

To calculate:

Direct labor efficiency variance and direct labor rate variance.

Answer 15

Expert Solution

Answer to Problem 15.10E

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Direct labor efficiency variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours

Standard hours for actual production = Actual production of stampingStandard stampings per hour Standard hours for actual production = 230,0002,000 Standard hours for actual production = 115 hours

Direct labor efficiency variance is calculated as follows-

Direct labor efficiency variance=(Standard hours allowed–Actual hours worked)*Standard costDirect labor efficiency variance=(115 hours – 121 hours) * $12Direct labor efficiency variance =$72 U

Direct labor rate variance-

Given,

Standard rate = $12
Actual hours worked = 121 hours
Actual labor cost = $1,573

Actual rate = Actual labor cost / Actual hours workedActual rate = $1,573 / 121Actual rate = $13

Direct labor rate variance is calculated as follows-

Direct labor rate variance = (Standard rate – Actual rate) * Actual hours workedDirect labor rate variance = ($12−$13) * 121 hoursDirect labor rate variance = $121 U

Conclusion:

Under direct labor efficiency variance, since standard hours are less than the actual works worked, hence variance is unfavorable.

Under direct labor rate variance, since standard rate is less than the actual rate, hence variance is unfavorable.

Answer 20

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 3-

To determine which alternative would improve control over stamping department's direct labor.

Expert Solution

Answer to Problem 15.10E

Including the direct labor rate variance and direct labor efficiency variance separately in the monthly report would improve the control over stamping department's direct labor. The variance needs to be clearly classified into rate and efficiency variance so that department personnel understand it in better way.

Explanation of Solution

Answer explained above.

Conclusion:

Thus, answer is explained.

Answer 21

To determine

Concept Introduction:

Direct Labor - Direct labor is the labor cost of the employees who convert materials into finished products.

Direct labor efficiency variance-

Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable.

Direct labor rate variance-

Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable.

Requirement 3-

To determine which alternative would improve control over stamping department's direct labor.

Answer 22

Expert Solution

Answer to Problem 15.10E

Including the direct labor rate variance and direct labor efficiency variance separately in the monthly report would improve the control over stamping department's direct labor. The variance needs to be clearly classified into rate and efficiency variance so that department personnel understand it in better way.