Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 22, Problem 3ADM
Direct labor time variance
Maywood City Police uses
| Police Activity | Standard Hours per Activity | Actual Activities for Year | Total Employee Hours |
| Theft | 0.60 | 7,000 | 4,200 |
| Arrest | 1.50 | 18,000 | 27,000 |
| Patrol activities | 0.30 | 9,000 | 2,700 |
| 33,900 |
The police are paid $25 per hour.
The actual amount of hours per activity for the year were as follows:
| Police Activity | Actual Hours per Activity |
| Theft | 0.75 |
| Arrest | 2.00 |
| Patrol activities | 0.40 |
- A. Determine the total budgeted cost to perform the three police activities.
- B. Determine the total actual cost to perform the three police activities.
- C. Determine the direct labor time variance.
- D. What does the time variance suggest?
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Critique a Variance Report
The Terminator Inc. provides on-site residential pest extermination services. The company bas several mobile teams who are dispatched from a central location in company-owned trucks. The company uses the number of jobs to measure activity. At the beginning of April, the company budgeted for 100 jobs, but the actual number of jobs turned out to be 105. A report comparing the budgeted revenues and costs to the actual revenues and costs appears below:
Required:
Is the above variance report useful for evaluating how well revenues and costs were controlled during April? Why or Why not?
A manager prepared the following table by which to analyze labor costs for the month: Actual hours at Actual rate is P10,000; Actual hours at Standard rate is P9,800 and Standard hours at Standard rate, P 8,820. What variance is P1,180? *
idle labor variance
labor efficiency variance
labor spending variance
total labor variance
Management should focus its sales and production efforts on the product or products that will provide
a. the lowest product costs
b. the lowest direct labor hours
c. the highest sales revenue
d. the maximum contribution margin
The following data relate to direct labor costs for the current period:
Standard costs
7,500 hours at $11.70
Actual costs
6,000 hours at $12.00
What is the direct labor time variance?
a. $18,000 favorable
b. $17,550 unfavorable
c. $17,550 favorable
d. $18,000 unfavorable
Which of the following is not a factory overhead allocation method?
a. factory costing
b. multiple departmental rates
c. activity-based costing
d. single plantwide rate
Chapter 22 Solutions
Financial & Managerial Accounting
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY