Tom Belford and Tony Sorrentino own a small business devoted to kitchen and bath granite installations. Recently,
Question:
Granite, per square foot $50.00
Glue (10 oz. @ $0.15) 1.50
Direct labor hours:
Cutting labor (0.10 hr. @ $15) 1.50
Installation labor (0.25 hr. @ $25) 6.25
These standards assumed that one seamless counter requires one sink cut (the space into which the sink will fit) as well as cutting the counter to fit the space available. Charlene tracked the actual costs incurred by Tom and Tony for granite installation for the next six months. She found that they completed 50 jobs with an average of 32 square feet of granite installed in each one. The following information on actual amounts used and cost was gathered:
Granite purchased and used (1,640 sq. ft.) $79,048
Glue purchased and used (16,000 oz.) $ 2,560
Actual hours cutting labor 180
Actual hours installation labor 390
The actual wage rate for cutting and installation labor remained unchanged from the standard rate.
Required:
1. Calculate the materials price variances and materials usage variances for granite and for glue for the past six months.
2. Calculate the labor rate variances and labor efficiency variances for cutting labor and for installation labor for the past six months.
3. Would it be worthwhile for Charlene to establish standards for atypical jobs (e.g., those with more than one sink cut or wider than normal)?
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Related Book For
Cornerstones of Managerial Accounting
ISBN: 978-0324660135
3rd Edition
Authors: Mowen, Hansen, Heitger
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