MA55 Problem: Variances - Brien Manufacturing Company

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MA55 Problem: Variances - Brien Manufacturing Company

 

Brien Manufacturing Company has a process cost accounting system. A monthly analysis comparesactual results with both a monthly plan and a flexible budget. Standard direct labour rates used in theflexible budget are established at the time the annual plan is formulated and held constant for the entireyear. Standard direct labour rates in effect for the fiscal year ending June 30 and standard hours allowedfor the output in April are:

Standard 

 

Standard DLH 

 

 Rate Per Hour 

 

 Allowed For Output 

 

Labour class III $8.00

 

500

 

Labour class II

 

$7.00

 

500

 

Labour class I $5.00

 

500

 

The wage rates for each labour class increased on January 1 under the terms of a new union contractnegotiated in December of the previous fiscal year. The standard wage rates were not revised to reflect thenew contract. The actual direct labour hours worked and the actual direct labour rates per hour experienced for the month of April were:

 Actual 

 

 Direct Labour 

 

 Actual Direct 

 

 Rate Per Hour 

 

 Labour Hours

 

Labour class III $8.50

 

550

 

Labour class II $7.50

 

650

 

Labour class I $5.40

 

375

 

 Required -

a. What is the total direct labour variance? b. What is the direct labour rate variance?c. What is the direct labour efficiency variance?d. What is the direct labour yield variance? (Round all standard prices to four decimal places.)e. What is the direct labour mix variance for April?

 

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