Henninger's Nursery Sells a Variety of Plants Required: Compute Each of the Following Variances

question 52

Essay

Henninger's Nursery sells a variety of plants.Henninger sells most of its plants to local landscapers in the community.These plants come in 'flats' containing 12 plants each.In May of the current year,Henninger had expected to sell 900 flats of petunias but produced and sold 940 flats instead.The company expects each flat to require 25 minutes of labour at a cost of $.15 per minute.In addition,variable overhead is applied at a rate of $.05 per minute.
Actual costs incurred during May for the production and sale of 940 flats was as follows:
$\begin{array}{ll} \text { Direct labour} & \text { \$ 3416 (24 400 minutes at \$ .14 per minute)}\\ \text { Variable overhead.} &1200\\\end{array}$

Required: Compute each of the following variances.Indicate whether the variance is favourable (F)or unfavourable (U).
A. Direct labour rate variance
B. Direct labour efficiency variance
C. Variable overhead spending variance
D. Variable overhead efficiency variance

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Definitions:

Personal Preference

An individual's inclination or liking for specific choices or options over others.

Social Consensus

The degree of agreement among members of a society or group on beliefs, behaviors, or values.

Public Agreement

A consensus or accord reached openly among the general populace or within a specific group.

Hedonistic Principle

The idea that individuals seek pleasure and avoid pain, guiding much of human behavior and decision-making.