Exercise 620 Coronado Family Instruments makes cellos During

*Exercise 6-20 Coronado Family Instruments makes cellos. During the past year, the company made 6,360 cellos even though the budget planned for only 5,500. The company paid its workers an average of $15 per hour, which was $1 higher than the standarod labor rate. The production manager budgets four direct labor hours per cello. During the year, a total of 24,970 direct labor hours were worked. (a) Calculate the direct labor rate and efficiency variances. (If variance is zero, select \"Not Applicable\" and enter o for the amounts.) Direct labor rate variance Direct labor efficiency variance $ Question Attempts: 0 of 5 used

Solution

Direct Labour Rate Variance = (SR – AR) * Actual Hrs

SR =$ 14

AR = $ 15

Actual Hrs = 24970 hrs

=(14 – 15) * 24970 = 24970(U)

Direct Labour Efficiency Variance = (Std Hrs – Actual Hrs) * SR

Std Hrs = 6960 * 4Hrs = 25440 Hrs

=(25440 – 24970) * 14 = 6580(F)