Carol's Music manufactures harmonicas. Carol uses standard costs to judge performance. Recently, a clerk mistakenly threw away
Question:
Carol's Music manufactures harmonicas. Carol uses standard costs to judge performance. Recently, a clerk mistakenly threw away some of the records, and only partial data for October exists. Carol knows that the total direct labor variance for the month was $300 F and that the standard labor rate was $11 per hour. A recent pay cut caused a favorable labor price variance of $0.60 per hour. The standard direct labor hours for actual October outputs were 5,700.
Requirements
1. Find the actual number of direct labor hours worked during October. First, find the actual direct labor rate per hour. Then, determine the actual number of direct labor hours worked by setting up the computation of the total direct labor variance as given.
2. Compute the direct labor rate and efficiency variances. Do these variances suggest that the manager may have made trade-offs? Explain.
Step by Step Answer: