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UGA ACCT 2102 - Standard Costs and Variances, Part II (Chapter 11)
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ACCT 2102 1st Edition Lecture 32 Outline of Last LectureI. ROI and RI Example #2II. Standard CostIII. Flexible Budgets and VariancesIV. Direct Materials VariancesV. Direct Materials Variances ExampleOutline of Current Lecture:VI. Total DM VarianceVII. Direct Labor VarianceVIII. DL Variances ExampleCurrent 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. Direct Labor Variance• DL Rate Varianceo What is it? If cost of labor is more or less than expectedo When can it be calculated? At the point of productiono Who is responsible for it? Production manager• DL rate Var. = hours logged (actual rate – standard rate)• DL Efficiency Varianceo What is it? o When can it be calculated? Point of productiono 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 Varianceo DL rate var + DL eff varo Can always use this formula bc hrs logged = hrs loggedo (Hours logged x actual rate) - (hrs allowed x std rate) VIII. DL Variances ExampleThese 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 eachvariance.DL rate = hrs logged (actual – std)DL rate = 42,300 ($9 - $10)DL rate = $42,300 FDL eff. = std rate (hrs logged – hrs allow)DL eff. = 42,300 – (20,000*2)DL eff. = $23,000 UTotal DL = -42,300 + 23,000Total DL = 19,300 FWill 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


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UGA ACCT 2102 - Standard Costs and Variances, Part II (Chapter 11)

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