Paulson\'s Piano Service, Inc. is trying to establish the standard labor cost of
ID: 2468328 • Letter: P
Question
Paulson's Piano Service, Inc. is trying to establish the standard labor cost of tuning a typical piano. The following data have been collected from time and motion studies conducted over the past three months. Determine the standard direct labor hour per each piano that is tuned. Determine the standard direct labor hourly rate. Determine the standard direct labor cost per each piano that is tuned. If it took 1.65 hours to tune a piano at the standard hourly rate, what was the direct labor quantity variance? During the month of May, Paulson's Piano service tuned 80 pianos. The average time spent on each piano was 1.75 hours. The average cost per hour was $62.25 per hour. Paulson's had to hire some less experienced part time help in order to handle the demand. Calculate the direct labor price variance. Calculate the direct labor quantity variance. Calculate the total direct labor variance. Explain what might have caused the variances.Explanation / Answer
(Actual Quantity x Actual Rate - Actual Quantity x Standard Rate )
Q 3 Actual Time spent on Tuning a Piano 1.25 Hours Horely Wage Rate $50 Payroll taxex 12% of wages Setup and downtime 5% of actual labour time Travell and rest period 15% of actual labour time Fring Benefit 20% of wges rate a Standard Direct Labour Hour per each piano Hours Actual Time Spent 1.25 Add: Setup and Downtime 5% 0.0625 Add: Travell and rest period 15% 0.1875 Ans Total Hours 1.5 b Standard Direct Labour Hourly rate Horely Wage Rate $50 Add: Payroll taxes 12% 6 Add: Fring Benefit 20% 10 Ans Hourly rate $66 c Standard Direct labour cost per Piano Standard Direct Labour Hour per each piano 1.5 Standard Direct Labour Hourly rate $66 Ans $99 d DL Efficiency /quantity Variance = ( standard direct labor hours allowed actual direct labor hours used ) × standard direct labor rate per hour or say (1.5-1.65)X$66 or say $ (9.90) Since the direct labor efficiency variance is negative, it is unfavorable. e. Total Piano tuned in may 80 Average time spent on each piano ( Hours) 1.75 Average cost for each hours ( $) 62.25 Average cost for each Piano ($62.25 X 1.75) 108.94 1 Direct labour Price Variance =(Actual Quantity x Actual Rate - Actual Quantity x Standard Rate )
or say (80 X 1.75X$62.25)-(80 X 1.75 X $66) or say -525 2 Direct labour quantity variance = standard direct labor hours allowed actual direct labor hours used ) × standard direct labor rate per hour or say (1.5-1.75)X$66 or say -16.5 3 Total Direct Labour Variance = ( Actual cost - standard cost) or say (80X$108.94)-(80X$99) or say 795.2 4 What might have caught the variance there are varios reasons behind labour variance like Rate, Production capacity changes, production capacity of labors and change in actual production