Question

Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. Jake’s expected to use...

Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. Jake’s expected to use 0.50 direct labor hours to produce one unit (batch) of product at a cost of $10 per hour. Actual results are in for last year, which indicates 45,000 batches of cheese were sold. The company's direct labor workforce worked 27,500 hours at $9 per hour. (13 Points)

Required:

(1)       Calculate the labor rate variance.

(2)       Calculate the labor efficiency variance.   

(3)       Suggest several possible reasons for the labor rate and efficiency variances.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Labour rate variance =standard rate - actual rate) actual hours worked
=(10-9)*27500
27500 favourable
Labour efficiency variance =(Standrd hours for actual production - actual hours) standard rate
=(22500-27500)*10
-50000 Unfavourable
Standrd hours for actual production =45000*.5
22500 hours
Reasons
Labour rate variance Change in minimum wage rate
Incorrect standard
More unskilled labours
Labour efficiency variance Better or worse productivity
More idle time
change in mix of labour gang ( skilled and unskilled)
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. Jake’s expected to use...
Jake’s Cheese Company produces gourmet cheese for resale at local grocery stores. Jake’s expected to use 0.50 direct labor hours to produce one unit (batch) of product at a cost of $10 per hour. Actual results are in for last year, which indicates 45,000 batches of cheese were sold. The company's direct labor workforce worked 27,500 hours at $9 per hour. Required: (1) Calculate the labor rate variance. (2) Calculate the labor efficiency variance. (3) Suggest several possible reasons for...
Newcastle Bakery produces bread for resale at grocery stores in the region. In Newcastle's master budget,...
Newcastle Bakery produces bread for resale at grocery stores in the region. In Newcastle's master budget, figures indicate that the company expects to use 2.5 pounds of direct materials for each unit produced at a cost of $5.00 per pound (one unit = one loaf of bread). Each unit produced will require 0.30 direct labor hours at a cost of $12.00 per hour. Variable manufacturing overhead is applied based on direct labor hours at a rate of $2.40 per hour....
Cheerful Colors has budgeted two hours of direct labor per batch of​ crayons, at a standard...
Cheerful Colors has budgeted two hours of direct labor per batch of​ crayons, at a standard cost of $13​/hour. During October, laborers actually worked 220 hours completing 70 batches. All 70 batches actually produced were sold. Cheerful Colors paid workers $20​/hour. What was Cheerful​ Color's direct labor efficiency variance for October​?
Decadent Halloween Candy Co. (DHC) produces specialty Halloween treats in large batches. One batch of treats...
Decadent Halloween Candy Co. (DHC) produces specialty Halloween treats in large batches. One batch of treats has the following standard costs and amounts: Standard kilograms of sugar 100 Standard cost per kilogram of sugar $1.90 Standard direct labour hours 2 Standard direct labour cost per hour $18.00 DHC produced 400 batches of treats in October. Actual input costs and per batch usage levels were as follows: Actual kilograms of sugar purchases and used 102 Actual cost per kilogram of sugar...
Dawson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard...
Dawson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard cost system to help control costs and has established the following standards for the Maze toy: Direct materials: 6 microns per toy at $0.34 per micron Direct labor: 1.2 hours per toy at $6.60 per hour During July, the company produced 4,900 Maze toys. Production data for the month on the toy follow: Direct materials: 72,000 microns were purchased at a cost of $0.33...
Villa Enterprises recently experienced a fire, forcing the company to use incomplete information to analyze operations....
Villa Enterprises recently experienced a fire, forcing the company to use incomplete information to analyze operations. Consider the following data and assume that all materials purchased during the period were used in production:                         Direct materials:                                 Standard price per pound: $9                                 Actual price per pound: $8                                 Price variance: $20,000F                                 Total of direct-material variances: $2,000F                         Direct labor:                                 Actual hours worked: 40,000                                 Actual rate per hour: $15                                 Efficiency variance: $28,000F                                 Total of direct-labor...
Dawson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard...
Dawson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard cost system to help control costs and has established the following standards for the Maze toy: Direct materials: 7 microns per toy at $0.33 per micron Direct labor: 1.2 hours per toy at $7.30 per hour During July, the company produced 5,300 Maze toys. The toy's production data for the month are as follows: Direct materials: 75,000 microns were purchased at a cost of...
ch 8 exer #8 Dawson Toys, Ltd., produces a toy called the Maze. The company has...
ch 8 exer #8 Dawson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard cost system to help control costs and has established the following standards for the Maze toy: Direct materials: 7 microns per toy at $0.34 per micron Direct labor: 1.4 hours per toy at $7.20 per hour During July, the company produced 4,600 Maze toys. Production data for the month on the toy follow: Direct materials: 72,000 microns were purchased at...
Dawson Toys, Ltd., produces a toy called the Maze. The company has recently created a standard...
Dawson Toys, Ltd., produces a toy called the Maze. The company has recently created a standard cost system to help control costs and has established the following standards for the Maze toy: Direct materials: 7 microns per toy at $0.31 per micron Direct labor: 1.5 hours per toy at $7.30 per hour During July, the company produced 4,800 Maze toys. The toy's production data for the month are as follows: Direct materials: 73,000 microns were purchased at a cost of...
1. O’Brien Vineyards has the following direct materials standard to manufacture one bottle of Pinot Noir:...
1. O’Brien Vineyards has the following direct materials standard to manufacture one bottle of Pinot Noir: 2.4 pounds of grapes per bottle at $1.65 per pound Last week, 5,415 pounds of grapes were purchased and used to make 2,125 bottles. The grapes cost a total of $9,043.05. What is O’Brien Vineyards materials quantity variance and the materials price variance? (Don’t forget to indicate if the variances are favorable or unfavorable). What are 2 possible reasons for the variances? 2. O’Brien...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT