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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.

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