Can someone please double-check my answers on these 3 problems (a, b, and c)? In
ID: 2497459 • Letter: C
Question
Can someone please double-check my answers on these 3 problems (a, b, and c)? In particular I am very confused with the debit/credit, but after doing the calculations, I know that a & b are correct at least partially, I am just unsure if they should be debit/credit. Can someone please explain to me? And problem c, I am not sure if the answer should be 316,000 or 320,000 (is it 2 standard hours * 158,000 units or 2 standard hours * 160,000 units)? Please help explain. I really want to understand this stuff and I have the calculations and formulas down. Thank you.
Explanation / Answer
1.
Direct Labour Efficiency Variance =Standard Rate * Actual Hours –Standard Rate *Standard Hours
Direct Labour Efficiency Variance=10 * 25,580 –10*29,403
Standard Hours =8.10 DLH per unit
Output=3630
Standard Hours =8.10*3630=29403
Direct Labour Efficiency Variance =-38230
Favourable Variance as the Actual labour hours are less than standard hours.
Credit 38230
2.
Labour rate variance =Actual quantity * Actual rate –Actual Quantity * Standard rate
Labour rate variance=26560*19.8-26560*19=21248
Unfavourable
Debit 21248
3.Standard hours for production
Each unit requires 2 hours of labour
Budgeted production =160000 units
Standard hours of production=320000