Samantha's Shades manufactures lamp shades. Samantha Sanders, the manager, uses standard costs to judge performance. Recently, a

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Samantha's Shades manufactures lamp shades. Samantha Sanders, the manager, uses standard costs to judge performance. Recently, a clerk mistakenly threw away some of the records, and Sanders has only partial data for October. She knows that the direct labor flexible budget variance for the month was \(\$ 1,050 \mathrm{U}\), the standard labor rate was \(\$ 9\) per hour, and the actual labor rate was \(\$ 9.50\) per hour. The standard direct labor hours for the actual October output were 4,475.

Requirements 

1. Find the actual number of direct labor hours worked during October. First, calculate the standard labor cost. Next, calculate the actual labor cost by adding the unfavorable flexible budget variance of \(\$ 1,050\) to the standard labor cost. Finally, divide the actual labor cost by the actual labor rate per hour. 

2. Compute the direct labor price and efficiency variances. Do these variances suggest the manager may have made a trade-off? Explain.

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Accounting

ISBN: 9780132439602

7th Edition

Authors: Charles T. Horngren, Walter T. Harrison

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