Question

Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance Guillermo's Oil and Lube...

Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance

Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 18 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 980 oil changes.

Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June:

Actual number of oil changes performed: 980
Actual number of direct labor hours worked: 286 hours
Actual rate paid per direct labor hour: $14.50
Standard rate per direct labor hour: $13.50

Required:

1. Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June using the formula approach.

Direct labor rate variance (LRV) $fill in the blank 1
Direct labor efficiency variance (LEV) $fill in the blank 3

2. Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June.

Direct labor rate variance (LRV) $fill in the blank 5
Direct labor efficiency variance (LEV) $fill in the blank 7

3. Calculate the total direct labor variance for oil changes for June.
$fill in the blank 9  

4. What if the actual wage rate paid in June was $12.50? What impact would that have had on the direct labor rate variance (LRV)? On the direct labor efficiency variance (LEV)? Indicate what the new variances would be below. If required, round your answers to the nearest cent.

Direct labor rate variance (LRV):
$fill in the blank 11  

Direct labor efficiency variance (LEV):
$fill in the blank 13

Homework Answers

Answer #1
Given
Actual hours AH 286
Actual Rate AR 14.50
Standard Rate SR 13.50
Standard Hours SH 294 (18mins/60mins*980 oil changes)
if the actual wage rate paid in June was $14.5
Formula Working Answer
Direct labor rate variance = (AR-SR) x AH (14.5-13.5)*286 $ 286 (A)
Direct labor efficiency variance = SR x (AH-SH) 13.5*(286-294) $ 108 (F)
Direct Labour variance = (SR*SH)-(AR*AH) (13.5*294) - (14.5*286) $ 178 (A)
if the actual wage rate paid in June was $12.50
Formula Working Answer
Direct labor rate variance = (AR-SR) x AH (12.5-13.5)*286 $ 286 (F)
Direct labor efficiency variance = SR x (AH-SH) 13.5*(286-294) $ 108 (F)
Direct Labour variance = (SR*SH)-(AR*AH) (13.5*294) - (12.5*286) $ 394 (F)
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance Guillermo's Oil and Lube...
Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 24 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 980 oil changes. Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month...
Calculating the Direct Materials Price Variance and the Direct Materials Usage Variance Guillermo's Oil and Lube...
Calculating the Direct Materials Price Variance and the Direct Materials Usage Variance Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 25 minutes and 6.8 quarts of oil are used. In June, Guillermo's Oil and Lube had 940 oil changes. Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month...
Calculate labor variances in a hotel (Learning Objective 3) This case is a continuation of the...
Calculate labor variances in a hotel (Learning Objective 3) This case is a continuation of the Caesars Entertainment Corporation serial case that began in Chapter 1. Refer to the introductory story in Chapter 1 herefor additional background. (The components of the Caesars serial case can be completed in any order.) Housekeeping is a significant cost in running a hotel; housekeeping includes daily cleaning of occupied guest rooms and guest bathrooms. Before the late 2015 renovation, the Roman Tower, formerly known...
Direct Materials and Direct Labor Variance Analysis Shasta Fixture Company manufactures faucets in a small manufacturing...
Direct Materials and Direct Labor Variance Analysis Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 30 employees. Each employee presently provides 35 hours of labor per week. Information about a production week is as follows: Standard wage per hour $16.80 Standard labor time per unit 20 min. Standard number of lbs. of brass 1.9 lbs. Standard price per lb. of brass $10.25 Actual price per lb. of brass $10.50 Actual...
Direct Materials and Direct Labor Variance Analysis Shasta Fixture Company manufactures faucets in a small manufacturing...
Direct Materials and Direct Labor Variance Analysis Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 50 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: Standard wage per hour $16.20 Standard labor time per unit 20 min. Standard number of lbs. of brass 1.8 lbs. Standard price per lb. of brass $13.00 Actual price per lb. of brass $13.25 Actual...
Direct labor hours are used as the basis for applying manufacturing overhead. This past month, the...
Direct labor hours are used as the basis for applying manufacturing overhead. This past month, the direct labor efficiency variance was $400 U and the direct labor rate variance was $2,000 F. This was based on an actual rate of $18 per hour, a standard wage rate of $20 per hour, 1,000 actual hours worked and 980 standard hours expected for the amount of output. This would imply that the variable overhead efficiency variance was: a. Favorable b. Unfavorable c....
Collins Co. had an unfavorable direct-labor efficiency variance of $5,250. The actual wage rate was $0.50...
Collins Co. had an unfavorable direct-labor efficiency variance of $5,250. The actual wage rate was $0.50 more than the standard rate of $10.00. If the company's standard direct-labor hours allowed for actual production totaled 9,000 hours, compute the actual direct-labor hours worked.
Actual quantity of direct labor 5,000 hours Actual direct labor rate $10 per hour Total direct...
Actual quantity of direct labor 5,000 hours Actual direct labor rate $10 per hour Total direct labor variance $8,600 Unfavorable . Direct labor rate variance $4,000 Unfavorable . Standard hours allowed per unit produced 2 hours Required: Find the following unknowns. a. Direct labor efficiency variance b. Standard rate per direct labor hour c. Actual quantity produced
If the direct labor rate variance is $500 favorable, and the direct labor efficiency variance is...
If the direct labor rate variance is $500 favorable, and the direct labor efficiency variance is $250 unfavorable, the journal entry will include a: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) check all...
Direct Materials and Direct Labor Variance Analysis Abbeville Company manufactures faucets in a small manufacturing facility....
Direct Materials and Direct Labor Variance Analysis Abbeville Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 50 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows: Standard wage per hr. $13.20 Standard labor time per faucet 20 min. Standard number of lb. of brass 2.10 lb. Standard price per lb. of brass $9.50 Actual price per lb. of brass $9.75 Actual lb....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT