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# Abby's Shades Labor Variances

Abby's Shades manufactures lamp shades. Abby Sanders, the owner, uses standard costs to calculate variances. Recently, a clerk mistakenly threw away some of the records, and Sanders has only partial data. For October, she knows that the direct labor flexible budget variance for the month was \$1,385 unfavorable; the standard labor rate was \$10 per hour and the actual labor rate was \$10.50 per hour. Standard direct labor hours for October were 4,450 as compared to actual hours of 4,370 .

1. Compute the labor rate variance
2. Compute the labor quantity/efficiency Variance.

Allocating Indirect Costs and Computing Income:

Antics, Inc., is a technology consulting firm focused on Web site development and integration of Internet business applications. The president of the company expects to incur \$719,600 of indirect costs this year, and she expects her firm to work 8,000 direct labor hours. Antics' system consultants earn \$350 per hour. Clients are billed at 150% of direct labor cost. Last month Antics' consultants spent 100 hours on Crickett's engagement.

Requirement:

1. Compute Antics' indirect cost allocation rate per direct labor hour.
2. Compute the total cost assigned to the Crickett engagement.
3. Compute the operating income from the Crickett engagement.

#### Solution Preview

See attached file for format and formulas.

Abby's Shades

Direct labor rate variance = (Actual hours worked * Standard rate) - (Actual hours worked * Actual cost)
(4,370 hrs * \$10 / hr) - (4,370 hrs * \$10.5 / hr)
\$(2,185) unfavorable

Direct ...

#### Solution Summary

This solution provides a complete computation of the given accounting problem formatted in Excel.

\$2.19