Use the Following Cost Information to Calculate the Direct Labor

question 112

Essay

Use the following cost information to calculate the direct labor rate and efficiency variances and indicate whether they are favorable or unfavorable.
$\begin{array}{lc}\text { Actual costs and quantities: } & \\\text { Direct labor cost incurred } & \$ 360,000 \\\text { Direct labor hours used } & 20,000 \text { hours } \\\text { Units produced } & 45,000 \text { units } \\\text { Standard costs and quantities: } & \\\text { Direct labor rate per hour } & \$ 16.50 \\\text { Hours to produce one unit } & 0.5 \text { hours }\end{array}$

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Definitions:

Journal Entries

These are recordings of financial transactions in the accounting books, documenting the debit and credit accounts affected by each transaction.

Purchase

The action of buying goods or services for business use or resale.

Par Value

The face value of a bond or stock, representing the amount the issuer agrees to pay at maturity (for bonds) or the nominal value of a share.

Carrying Value

Also known as the book value, it is the value of an asset as reported on the balance sheet, calculated as the original cost minus accumulated depreciation, depletion, or amortization.