UMPI's Potatoes produces ready-to-eat mashed potatoes for resale at food stores. UMPI expected to use 0.40 direct
Question:
UMPI's Potatoes produces ready-to-eat mashed potatoes for resale at food stores. UMPI expected to use 0.40 direct labor hours to produce one unit (batch) of product at a cost of $7.50 per hour. Actual results are in for the last year, which indicates 55,000 batches of mashed potatoes were sold. The company's direct labor workforce worked 26,400 hours at $6.50 per hour. 1) Calculate the labor rate variance. Indicate if it is favorable or unfavorable to the company. 2) Calculate the labor efficiency variance. Indicate if it is favorable or unfavorable to the company. 3) Provide a logical reasoning for the materials price and quantity variances calculated in 1 and 2.
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer