Financial and Managerial Accounting Wa10

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Chapter 24: Brief Exercise 24.6, page 1057 A popular product of Loring glassworks is a hand-decorated vase. The company’s standard cost system calls for .75 hours of direct labor per vase, at a standard wage rate of $8.25. During September, Loring produced 4,000 vases at an actual direct labor cost of $24,464 for 2,780 direct labor hours. What is the actual wage rate per hour? Compute the labor rate and efficiency variances for the month. Was paying workers the actual wage rather than the standard wage an efficient strategy for Loring? Actual wage rate per hour = Actual direct labor cost / actual direct labor hours = $24,464 /2,780 = $8.80 Labor rate variance = (Actual Rate - Standard Rate) x Actual labor hours = ($8.80- $8.25) x2,780 = $1,529 U Labor efficiency variance = (Standard time for actual output - actual time) x Standard labor rate per hour = [(4,000x 0.75) - 2,780] x$8.25 = $1,815F It seems that it made more sense for Loring to pay the actual wage rather than the standard wage. The workers worked efficiently for 2780 hours instead of the standard 3000 (0.75 hours x 4000) hours allowed. Seems like an efficient strategy. Brief Exercise 24.8, page 1058 One of the products of Hearts & Flowers is a one-pound box of chocolate candy, packaged in a box bearing the customer’s logo (minimum order, 100 boxes). The standard cost of the chocolate candy used is $2 per pound. During November, 20,000 of these one-pound boxes were produced, requiring 20,800 pounds of chocolate candy at a total direct materials cost of $42,640. Determine the materials price and quantity variances for November with respect to the candy used in producing this product. Materials price variance = $42,640 – $41,600 = $1,040 Materials quantity variance = (800) pounds x $2 per pound = ($1,600) Exercise 24.1, page 1058 The following are 7 technical terms

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