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    Textile Express Company Labor and Overhead Variances

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    Calculating Labor and Overhead Variances

    At the start of 2012, Textile Express Company determined its standard labor cost to be 2.5 hours per unit at $33.90 per hour. The budget for variable overhead was $9 per unit, and budgeted fixed overhead was $15,000 for the year. Expected annual production was 5,000 units. During 2012, the actual cost of labor was $34.30 per hour. Textile Express produced 4,840 units requiring 11,800 direct labor hours. Actual overhead for the year was $48,820.

    Calculate labor rate and efficiency variances and the controllable overhead variance and the overhead volume variance. (Round calculations to 2 decimal places, e.g. 25.21 and the final answers to 0 decimal places, e.g. 5,250. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)

    Labor Rate Variance $ ______ favorable or unfavorable
    Labor Efficiency Variance $______ unfavorable or favorable
    Controllable Overhead Variance $_______ favorable or unfavorable
    Overhead Volume Variance $______ unfavorable or favorable

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    Solution Summary

    A diagram to show you how these amounts are computed is created in Excel for you with the computations shown in detail. Instructional comments are added in Excel.

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