Question

Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:

	Standard Quantity		Standard Price (Rate)			Standard Unit Cost
Direct materials (plastic)	8	sq ft.	$	1.02	per sq. ft.	$	8.16
Direct labor	0.3	hr.	$	11.10	per hr.		3.33
Variable manufacturing overhead (based on direct labor hours)	0.3	hr.	$	2.60	per hr.		0.78
Fixed manufacturing overhead $383,880 ÷ 914,000 units)							0.42

Parker Plastic had the following actual results for the past year:

Number of units produced and sold		1,080,000
Number of square feet of plastic used		11,600,000
Cost of plastic purchased and used	$	11,600,000
Number of labor hours worked		312,000
Direct labor cost	$	3,681,600
Variable overhead cost	$	800,000
Fixed overhead cost	$	369,000

Required:
Calculate Parker Plastic’s direct labor rate and efficiency variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

Answer 1

Ans-Direct labor rate variance= (Actual rate-Standard rate)*Actual hours worked

=(11.80-11.10)*312,000

=$218,400 (U)

Calculation of actual rate= Direct labor cost/number of labor hours worked

=$3,681,600/312,000

=$11.80

Direct labor efficiency variance= (Actual hours -Standard hours)*Standard rate

=(312,000-324,000)*11.10

=133,200 (F)

Calculation of standard hours= Number of units produced and sold*standard quantity

=1,080,000*0.3

=324,000

kindly give thumbsup if u like my answer please....Thanks!!!