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Chapter 23: 13RQ (page 1305)

Question:List the direct labor variances, and briefly describe each.

Short Answer

Expert verified

Answer

The direct material variances can be in form of direct labor cost variance and direct labor efficiency variance

Step by step solution

01

Definition of direct labor

Direct labor is defined as the cost incurred by the company on the labor which directly associated with the production process of the business.

02

Direct labor variances

The direct labor variances are as follows:

  1. Direct labor Cost variance: The variances of direct labor cost keep in check that the direct labor cost per hour within the standards set by the management of the company
  1. Direct Labor Efficiency Variance: The direct labor efficiency variance shows the ability of the business to keep the actual usage of direct labor within the standards

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Most popular questions from this chapter

Question:What is a standard cost system?

In 75 words or fewer, explain what a cost variance is and describe its potential causes.

Murphy Company managers received the following incomplete performance report:

Units Actual Results Flexible Budget Variance Static Budget Flexible Budget Sales Volume Variance Sales Revenue Contribution Margin Fixed Expenses Operating Income 35,000 (a) (b) 5,000 F \( 29,000 \) 14,000 105,000 0 \( 219,000 \) 27,000 F 85,000 13,000 MURPHY COMPANY Flexible Budget Performance Report For the Year Ended July 31, 2018 134,000 14,000 35,000 \( 35,000 100,000 \) 219,000 84,000 135,000 (c) (d) (e) (f) (h) (g) (i) (j) (k) (l)

Complete the performance report. Identify the employee group that may deserve praise and the group that may be subject to criticism. Give your reasoning.

Matching terms

Match each term to the correct definition.

Terms Definitions

a. Flexible budget

b. Flexible budget variance

c. Sales volume variance

d. Static budget

e. Variance

1. A summarized budget for several levels of volume thatseparates variable costs from fixed costs.

2. A budget prepared for only one level of sales.

3. The difference between an actual amount and thebudgeted amount.

4. The difference arising because the company actuallyearned more or less revenue, or incurred more or lesscost, than expected for the actual level of output.

5. The difference arising only because the number ofunits actually sold differs from the static budget units.

List the eight product variances and the manager most likely responsible for each.
See all solutions

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