Unformatted text preview: uring square yards of fabric costing $68,600. Direct labor totals 7,600 hours for $79,800. $79,800. Required: compute the direct labor price and efficiency variances. Actual unit labor rate: $79,800 / 7,600 hours = $10.50 per hour Actual $10.50 hour Price Variance: 7,600 * ($10.50 – $10) = $3,800 unfavorable Efficiency Variance: $10 * (7,600 – 7,500) = $1,000 unfavorable Chapter 7 Flexible Budgets, Direct Cost Variances, and Management Control and Efficiency refers to the relative amount of inputs used to achieve a given output inputs Effectiveness refers to the degree to which Effectiveness a predetermined objective or target is met predetermined Chapter 8 Flexible Budgets, Overhead Cost Variances and Management Control Management Chapter 7 focused on analysis of direct Chapter manufacturing costs. This chapter addresses planning and variance analysis of indirect manufacturing costs (both variable and fixed). variable Chapter 8 Flexible Budgets, Overhead Cost Variances and Management Control Management Variable overhead involves two challenges: Variable undertake only those activities that add value for undertake customers customers Perform the value adding activities efficiently Undertake only value adding activities Perform value adding activities efficiently Choose the appropriate level of capacity that will Choose benefit the company over an extended period benefit Fixed overhead involves three challenges: Chapter 8 Flexible Budgets, Overhead Cost Variances and Man...
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