Zinn Corporation recently agreed to a union contract provision that guarantees a minimum wage of $1,620...
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Zinn Corporation recently agreed to a union contract provision that guarantees a minimum wage of $1,620 per month to each direct labour employee equivalent to 135 hours of work each month. Currently, 135 employees are covered by this provision. All direct labour employees are paid $12 per hour. Thus, until an employee works 135 hours, the remuneration is a fixed $1,620 per employee each month. Rusty Zinn, the assistant to the accountant was given the task of budgeting for the direct labour cost. Because of the contract provision, Rusty decided that the $218,700 (= 135 x $1,620 per month) should be treated as a fixed monthly cost. Rusty was instructed to calculate each month's budget using the following formula: $218,700 + $8 per direct labour-hour. Figures for the first three months of the fiscal year are as follows: April 28,000 $ 442,700 $ 336,000 $ 106,700 F Direct labour-hours planned and worked Direct labour costs budgeted Direct labour costs incurred Variance Required: 1. This part of the question is not part of your Connect assignment. May 43,000 $ 562,700 $ 516,000 46,700 F $ These figures are a source of concern because they show unfavourable variances when production is high, and favourable variances during slow months. The factory manager is certain that this trend does not reflect reality. D June 63,000 $ 722,700 $ 756,000 $ 33,300 U Zinn Corporation recently agreed to a union contract provision that guarantees a minimum wage of $1,620 per month to each direct labour employee equivalent to 135 hours of work each month. Currently, 135 employees are covered by this provision. All direct labour employees are paid $12 per hour. Thus, until an employee works 135 hours, the remuneration is a fixed $1,620 per employee each month. Rusty Zinn, the assistant to the accountant was given the task of budgeting for the direct labour cost. Because of the contract provision, Rusty decided that the $218,700 (= 135 x $1,620 per month) should be treated as a fixed monthly cost. Rusty was instructed to calculate each month's budget using the following formula: $218,700 + $8 per direct labour-hour. Figures for the first three months of the fiscal year are as follows: April 28,000 $ 442,700 $ 336,000 $ 106,700 F Direct labour-hours planned and worked Direct labour costs budgeted Direct labour costs incurred Variance Required: 1. This part of the question is not part of your Connect assignment. May 43,000 $ 562,700 $ 516,000 46,700 F $ These figures are a source of concern because they show unfavourable variances when production is high, and favourable variances during slow months. The factory manager is certain that this trend does not reflect reality. D June 63,000 $ 722,700 $ 756,000 $ 33,300 U
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Related Book For
Introduction to Managerial Accounting
ISBN: 978-1259105708
5th Canadian edition
Authors: Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan
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