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435
P13–4, Concluded
c. Direct Labor Cost Variance
Rate variance:
Direct Labor Rate Variance = (Actual Rate per Hour – Standard Rate per Hour) ×
Actual Hours
Time variance:
Direct Labor Time Variance = (Actual Direct Labor Hours – Standard Direct Labor
Hours) × Standard Rate per Hour
Total direct labor cost variance:
Direct Labor Cost Variance = Direct Labor Rate Variance + Direct Labor Time
Variance
436
P13–5
a. Direct Materials Cost Variances
Price variance:
Direct Materials Price Variance = (Actual Price – Standard Price) × Actual Quantity
Quantity variance:
Direct Materials Quantity Variance = (Actual Quantity – Standard Quantity) ×
Standard Price
Total direct materials cost variance:
Direct Materials Cost Variance = Direct Materials Price Variance + Direct
Materials Quantity Variance
b. Direct Labor Cost Variances
Rate variance:
Direct Labor Rate Variance = (Actual Rate per Hour – Standard Rate per Hour) ×
Actual Hours
437
P13–5, Continued
Time variance:
Direct Labor Time Variance = (Actual Direct Labor Hours – Standard Direct Labor
Hours) × Standard Rate per Hour
Total direct labor cost variance:
Direct Labor Cost Variance = Direct Labor Rate Variance + Direct Labor Time
Variance
c. Appendix: Factory Overhead Cost Variances
Variable factory overhead controllable variance:
438
P13–5, Concluded
Alternative Computation of Overhead Variances
Factory Overhead
439
P13–6
1. Actual hours provided (2 × 40 hrs.) .............................. 80
2. Actual hours provided (2 × 40 hrs.) .............................. 80
3. Actual labor rate ............................................................. $ 20.00
4. Actual hours provided (3 × 40 hrs.) .............................. 120
5. The bonus is the better approach by $560. The cost variance for paying the
6. The labor rate and time variances fail to consider the number of errors in the
440
Appendix: P13–7
A B C D E
1 SEABURY, INC.
2 Factory Overhead Cost Variance Report—Assembly Department
3 For the Month Ended October 31
6
7 Variances
8 Actual Budget* Unfavorable Favorable
9 Variable costs:
10 Indirect factory wages $140,500 $141,000 $ (500)
23 Volume variance—unfavorable:
*The budgeted variable costs are determined by multiplying the budgeted variable
costs per unit at planned production times the actual production for October. The
441
Appendix: P13–7, Concluded
Alternative Computation of Overhead Variances
Factory Overhead
Actual costs
$388,070
442
METRIC-BASED ANALYSIS
MBA 13–1
1. Cutting Process:
5. Overall Process Yield
443
MBA 13–2
1.
Process Yield
2.
Process Yield
Year 3 (75 ÷ 149) .................................... 50.3%
3.
Process Yield
Jimmie Johnson (77 ÷ 516) ................... 14.9%
5. In terms of number of wins, Year 2 had the highest yield of 9.0%, and Years 3
444
MBA 13–3
1. Hilton improved its occupancy rate from 74.6% in Year 1 to 75.4% in Year 2.
This is a favorable change.
MBA 13–4
1. Stop-N-Stay
Occupancy Rate = Room Nights Occupied
Available Room Nights
