Cruz Company Established a Direct Labor Standard of 0

question 138

Essay

Cruz Company established a direct labor standard of 0.5 hours per unit at $12 per hour for one of its products.In April,Cruz produced 16,000 units and used 8,100 direct labor hours.
Required:
Based on this information,
(a)Which variance can you calculate?
(b)What is the dollar amount of the variance?
(c)Is the variance favorable or unfavorable?
(d)Do you consider the variance to be sufficiently material that managers should investigate to discover the cause of the variance?

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Definitions:

Insolvent Debtor

A debtor who cannot pay debts in a timely fashion.

Purchase Money Security Interest

A legal claim that allows creditors to repossess or claim goods as collateral if the buyer fails to meet the terms of the credit agreement, specifically concerning goods that were purchased with the loan.

Inventory

The total amount of goods and materials held by a business for the purpose of resale or production.

Perfected PMSI

Perfected PMSI (Purchase Money Security Interest) is a legal claim or lien that grants the lender priority over other creditors regarding the debtor's asset, provided certain legal procedures are followed.