Parker Plastic, Inc., manufactures plastic mats to use with rolling office chair

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) 12 sq ft1.10 per sq. ft. Standard Unit Cost 3.30 0.55 062 13.20 Direct materials (plastic) Direct labor Variable manufacturing overhead (based on $13.20 per hr 2.20 per hr 0.25 hr 0.25 hr direct labor hours) Fixed manufacturing overhead S579,080 934,000 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 1,280,000 12,600,000 $ 12,600,000 332,000 $4,083,600 $1,589,000 $ 389,000 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 Variancoe

Explanation / Answer

Direct labour rate variance = (13.20*332000-4083600) = 298800 F

Direct labour efficiency variance = (1280000*.25-332000)*13.20 = 158400 U

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