ACCT 2102 1st Edition Lecture 32 Outline of Last Lecture I ROI and RI Example 2 II Standard Cost III Flexible Budgets and Variances IV Direct Materials Variances V Direct Materials Variances Example Outline of Current Lecture VI Total DM Variance VII Direct Labor Variance VIII DL Variances Example Current Lecture Standard Costs and Variances Part II Chapter 11 VI Total DM Variance Total DM Var qty used x actual qty allowed x std VII VIII Direct Labor Variance DL Rate Variance o What is it If cost of labor is more or less than expected o When can it be calculated At the point of production o Who is responsible for it Production manager DL rate Var hours logged actual rate standard rate DL Efficiency Variance o What is it o When can it be calculated Point of production o Who is responsible for it Production manager DL Eff Var standard rate hrs logged hrs allowed Hrs allowed actual output x standard input ratio Total DL Variance o DL rate var DL eff var o Can always use this formula bc hrs logged hrs logged o Hours logged x actual rate hrs allowed x std rate DL Variances Example These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Leave Only Footprints Inc manufactures lightweight sleeping bags During the previous period 42 300 hours of direct labor time were used to produce 20 000 sleeping bags The actual direct labor cost for the period was 380 700 The company anticipated the direct labor cost of each sleeping bag to be 20 and the standard quantity to be 2 hours per sleeping bag 380 700 42 300 9 hr actual rate 20 2 10 DL hr std rate Calculate all DL variances Assuming all variances are material provide a likely explanation for each variance DL rate hrs logged actual std DL rate 42 300 9 10 DL rate 42 300 F DL eff std rate hrs logged hrs allow DL eff 42 300 20 000 2 DL eff 23 000 U Total DL 42 300 23 000 Total DL 19 300 F Will there ever be a difference between the DL hours logged and the DL hours used No DL rate eff is F then it is negative DL rate eff U then it is positive
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