Parker Plastic, Inc., manufactures plastic mats to use with rolling office chair
ID: 2408057 • Letter: P
Question
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Standard Quantity 12 sq ft. 0.3 hr Standard Unit Cost 3.57 0.69 0.50 Standard Price (Rate) 1.45 per sq. ft. 11.90 per hr 17.40 Direct materials (plastic) Direct labor Variable manufacturing overhead (based on 2.30 per hr 0.3 hr direct labor hours) Fixed manufacturing overhead $461,000+ 922,000 units) Parker Plastic had the following actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,160,000 12,000,000 $ 16,800,000 320,000 $3,744,000 $ 1,100,000 $377,000 Required Calculate Parker Plastic's direct labor rate and efficiency variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Direct Labor Rate Variance Direct Labor Efficiency VarianceExplanation / Answer
Direct labour rate variance = (Standard rate-actual rate)actual hours
= (11.90*320000-3744000)
Direct labour rate variance = 64000 F
Direct labour efficiency variance = (Standard hour-actual hour)Standard rate
= (1160000*.3-320000)*11.90
Direct labour efficiency variance = 333200 F