Parker Plastic, Inc., manufactures plastic mats to use with rolling office chair
ID: 2508448 • 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 Standard Price (Rate 10 sq ft. 0.82 per sq. ft. Standard Unit Cost $ 8.20 Direct materials (plastic) Direct labor Variable manufacturing overhead (based on 0.25 hr 0.25 hr $10.20 per hr $1.40 per hr 2.55 0.35 direct labor hours) Fixed manufacturing overhead $270,600 0.30 902,000 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 1,020,000 11,000,000 $ 8,800,000 300,000 $ 3,000,000 $ 400,000 $357,000 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
= (10.20*300000-3000000)
Direct labour rate variance = 60000 F
Direct labour efficiency variance = (Standard hour-actual hour)Standard rate
= (1020000*.25-300000)*10.20
Direct labour efficiency variance = 459000 U