Question

1) MNO produces a single product. The standard production requirement for each unit requires 0.50 direct labour hours at a standard rate of $11 per hour. During the last year, MNO assembly line workers worked a total of 5,000 hours at a cost of $50,000 to MNO. Also last year, MNO manufactured 3,000 units of product. What was the company's direct labour rate variance for the year?

2) MNO produces a single product. The standard production requirement for each unit requires 0.50 direct labour hours at a standard rate of $15 per hour. During the last year, MNO assembly line workers worked a total of 2,000 hours at a cost of $60,000 to MNO. Also last year, MNO manufactured 3,000 units of product. What was the company's direct labour efficiency variance for the year?

3) MNO produces a single product. The standard production requirement for each unit requires 0.50 variable overhead hours at a standard rate of $4 per hour. During the last year, MNO assembly line workers worked a total of 2,000 hours. Variable overhead spending was $9,600 to MNO and is allocated based on direct labour hours. Also last year, MNO manufactured 3,000 units of product. What was the company's variable overhead spending variance for the year?

4) MNO's actual and budgeted fixed overhead amounts for the last year were $120,000 and $100,000. Actual hours worked were 30,000 hours. 50,000 hours had been budgeted for the year. MNO's predetermined fixed overhead rate was:

Answer 1

1.
Direct Labor Rate Variance = Actual labor cost - Actual hours x Standard Rate
= $50000 - 5000 x $11 = $5000 (F)

2.
Direct Labor Efficiency Variance = (Actual hours - Standard hours) x Standard Rate
= (2000 - 3000 x 0.5) x $15 = $7500 (U)

3.
Variable Overhead spending variance = ($4.80-4) x 2000 = $1600 U

4.
Predetermined overhead rate = $100000 / 50000 = $2 per hour

There seems some mistake in part 3), since variable spending variance is already given, and variable spending variance is required to be calculated.