Standard Costing System: Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances. Variances Analysis: A Variance analysis is comparing the actual and standard figures and finding the differences or variances Direct labor variances: Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories: 1. Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows: Direct labor rate variance = ( Actual rate – Standard rate ) × Actual hours 2. Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows: Direct labor efficiency variance = ( Actual hours – Standard hours ) × Standard rate 3. Direct labor cost variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows: Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance Or Direct Labor cost variance = Actual Labor cost – Standard Labor Cost Requirement-1: To determine: The calculation of direct labor cost variance

Question

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Answer 1

Question

Chapter 23, Problem 23.1TIATC

To determine

Concept Introduction:

Standard Costing System: Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances.

Variances Analysis: A Variance analysis is comparing the actual and standard figures and finding the differences or variances

Direct labor variances: Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:

1. Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:

$Direct labor rate variance = (Actual rate – Standard rate) \times Actual hours$

2. Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:

$Direct labor efficiency variance = (Actual hours – Standard hours) \times Standard rate$

3. Direct labor cost variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows:

$Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance$

Or

Direct Labor cost variance = Actual Labor cost – Standard Labor Cost

Requirement-1:

To determine: The calculation of direct labor cost variance

To determine

Requirement -2:

To explain: Direct labor cost variance and its calculation

To determine

Requirement -3:

To explain: Direct labor efficiency variance and its calculation

To determine

Requirement -4:

To explain: Unfavorable Direct labor cost variance and the measures to control this variance

To determine

Requirement -5:

To explain: Unfavorable Direct labor efficiency variance and the measures to control this variance

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Cozy Retreats currently sells 420 Standard hot tubs, 580 Luxury hot tubs, and 190 Premium model hot tubs each year. The firm is considering adding a Comfort model hot tub and expects that, if it does, it can sell 340 of them. However, if the new hot tub is added, standard sales are expected to decline to 290 units while Luxury sales are expected to decline to 310. The sales of the Premium model will not be affected. Standard hot tubs sell for an average of $8,900 each. Luxury hot tubs are priced at $14,500 and the Premium model sells for $22,000 each. The new Comfort model will sell for $12,300. What is the value of erosion?

What is the value of erosion?

Answer 2

Question

Chapter 23, Problem 23.1TIATC

To determine

Concept Introduction:

Standard Costing System: Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances.

Variances Analysis: A Variance analysis is comparing the actual and standard figures and finding the differences or variances

Direct labor variances: Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:

1. Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:

$Direct labor rate variance = (Actual rate – Standard rate) \times Actual hours$

2. Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:

$Direct labor efficiency variance = (Actual hours – Standard hours) \times Standard rate$

3. Direct labor cost variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows:

$Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance$

Or

Direct Labor cost variance = Actual Labor cost – Standard Labor Cost

Requirement-1:

To determine: The calculation of direct labor cost variance

To determine

Requirement -2:

To explain: Direct labor cost variance and its calculation

To determine

Requirement -3:

To explain: Direct labor efficiency variance and its calculation

To determine

Requirement -4:

To explain: Unfavorable Direct labor cost variance and the measures to control this variance

To determine

Requirement -5:

To explain: Unfavorable Direct labor efficiency variance and the measures to control this variance

Expert Solution & Answer

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Answer 3

Question

Chapter 23, Problem 23.1TIATC

To determine

Concept Introduction:

Standard Costing System: Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances.

Variances Analysis: A Variance analysis is comparing the actual and standard figures and finding the differences or variances

Direct labor variances: Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:

1. Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:

$Direct labor rate variance = (Actual rate – Standard rate) \times Actual hours$

2. Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:

$Direct labor efficiency variance = (Actual hours – Standard hours) \times Standard rate$

3. Direct labor cost variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows:

$Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance$

Or

Direct Labor cost variance = Actual Labor cost – Standard Labor Cost

Requirement-1:

To determine: The calculation of direct labor cost variance

To determine

Requirement -2:

To explain: Direct labor cost variance and its calculation

To determine

Requirement -3:

To explain: Direct labor efficiency variance and its calculation

To determine

Requirement -4:

To explain: Unfavorable Direct labor cost variance and the measures to control this variance

To determine

Requirement -5:

To explain: Unfavorable Direct labor efficiency variance and the measures to control this variance

Expert Solution & Answer

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Answer 4

Question

Chapter 23, Problem 23.1TIATC

To determine

Concept Introduction:

Standard Costing System: Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances.

Variances Analysis: A Variance analysis is comparing the actual and standard figures and finding the differences or variances

Direct labor variances: Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:

1. Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:

$Direct labor rate variance = (Actual rate – Standard rate) \times Actual hours$

2. Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:

$Direct labor efficiency variance = (Actual hours – Standard hours) \times Standard rate$

3. Direct labor cost variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows:

$Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance$

Or

Direct Labor cost variance = Actual Labor cost – Standard Labor Cost

Requirement-1:

To determine: The calculation of direct labor cost variance

To determine

Requirement -2:

To explain: Direct labor cost variance and its calculation

To determine

Requirement -3:

To explain: Direct labor efficiency variance and its calculation

To determine

Requirement -4:

To explain: Unfavorable Direct labor cost variance and the measures to control this variance

To determine

Requirement -5:

To explain: Unfavorable Direct labor efficiency variance and the measures to control this variance

Expert Solution & Answer

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See solution

Answer 5

Chapter 23, Problem 23.1TIATC

To determine

Concept Introduction:

Standard Costing System: Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances.

Variances Analysis: A Variance analysis is comparing the actual and standard figures and finding the differences or variances

Direct labor variances: Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:

1. Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:

$Direct labor rate variance = (Actual rate – Standard rate) \times Actual hours$

2. Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:

$Direct labor efficiency variance = (Actual hours – Standard hours) \times Standard rate$

3. Direct labor cost variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows:

$Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance$

Or

Direct Labor cost variance = Actual Labor cost – Standard Labor Cost

Requirement-1:

To determine: The calculation of direct labor cost variance

To determine

Requirement -2:

To explain: Direct labor cost variance and its calculation

To determine

Requirement -3:

To explain: Direct labor efficiency variance and its calculation

To determine

Requirement -4:

To explain: Unfavorable Direct labor cost variance and the measures to control this variance

To determine

Requirement -5:

To explain: Unfavorable Direct labor efficiency variance and the measures to control this variance

Answer 6

Chapter 23, Problem 23.1TIATC

To determine

Concept Introduction:

Standard Costing System: Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances.

Variances Analysis: A Variance analysis is comparing the actual and standard figures and finding the differences or variances

Direct labor variances: Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:

1. Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:

$Direct labor rate variance = (Actual rate – Standard rate) \times Actual hours$

2. Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:

$Direct labor efficiency variance = (Actual hours – Standard hours) \times Standard rate$

3. Direct labor cost variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows:

$Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance$

Or

Direct Labor cost variance = Actual Labor cost – Standard Labor Cost

Requirement-1:

To determine: The calculation of direct labor cost variance

Answer 7

Chapter 23, Problem 23.1TIATC

To determine

Concept Introduction:

Standard Costing System: Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances.

Variances Analysis: A Variance analysis is comparing the actual and standard figures and finding the differences or variances

Direct labor variances: Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:

1. Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:

$Direct labor rate variance = (Actual rate – Standard rate) \times Actual hours$

2. Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:

$Direct labor efficiency variance = (Actual hours – Standard hours) \times Standard rate$

3. Direct labor cost variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows:

$Direct labor cost variance = Direct labor rate variance + Direct labor efficiency variance$

Or

Direct Labor cost variance = Actual Labor cost – Standard Labor Cost

Requirement-1:

To determine: The calculation of direct labor cost variance

Answer 8

To determine

Requirement -2:

To explain: Direct labor cost variance and its calculation

Answer 9

To determine

Requirement -2:

To explain: Direct labor cost variance and its calculation

Answer 10

To determine

Requirement -3:

To explain: Direct labor efficiency variance and its calculation

Answer 11

To determine

Requirement -3:

To explain: Direct labor efficiency variance and its calculation

Answer 12

To determine

Requirement -4:

To explain: Unfavorable Direct labor cost variance and the measures to control this variance

Answer 13

To determine

Requirement -4:

To explain: Unfavorable Direct labor cost variance and the measures to control this variance

Answer 14

To determine

Requirement -5:

To explain: Unfavorable Direct labor efficiency variance and the measures to control this variance

Answer 15

To determine

Requirement -5:

To explain: Unfavorable Direct labor efficiency variance and the measures to control this variance

Answer 16

Expert Solution & Answer

Answer 17

Expert Solution & Answer

Answer 18

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Answer 19

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Concept explainers

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Requirement -2:

To explain: Direct labor cost variance and its calculation

Requirement -3:

To explain: Direct labor efficiency variance and its calculation

Requirement -4:

To explain: Unfavorable Direct labor cost variance and the measures to control this variance

Requirement -5:

To explain: Unfavorable Direct labor efficiency variance and the measures to control this variance

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Chapter 23 Solutions

Concept explainers

Videos

Requirement -2: To explain: Direct labor cost variance and its calculation

Requirement -3: To explain: Direct labor efficiency variance and its calculation

Requirement -4: To explain: Unfavorable Direct labor cost variance and the measures to control this variance

Requirement -5: To explain: Unfavorable Direct labor efficiency variance and the measures to control this variance

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Chapter 23 Solutions

Requirement -2:

To explain: Direct labor cost variance and its calculation

Requirement -3:

To explain: Direct labor efficiency variance and its calculation

Requirement -4:

To explain: Unfavorable Direct labor cost variance and the measures to control this variance

Requirement -5:

To explain: Unfavorable Direct labor efficiency variance and the measures to control this variance