Reference no: EM133327507

Question 1. Sally Smith, a production worker, announced her intent to resign to accept another job paying $1.75 more per hour. To keep Sally, the production manager agreed to raise her salary from $12 to $14 per hour. Sally works an average of 315 regular hours per month.

Effect on labor rate variance :?

Question 2. At the beginning of the month, a supplier of a component used in our product notified us that, because of a minor design improvement, the price will be increased by 10% above the current standard price of $125 per unit. As a result of the improved design, we expect the number of defective components to decrease by 90 units per month. On average, 2,160 units of the component are purchased each month. Defective units are identified prior to use and are not returnable.

Effect on materials price variance ?

Effect on materials quantity variance ?

Question 3. In an effort to meet a deadline on a rush order in Department A, the plant manager reassigned several higher-skilled workers from Department B, for a total of 648 labor hours. The average salary of the Department B workers was $2.15 more than the standard $11.00 per hour rate of the Department A workers. Since they were not accustomed to the work, the average Department B worker was able to produce only 24 units per hour instead of the standard 36 units per hour. (Consider only the effect on Department A labor variances.)

Effect on labor rate variance ?

Effect on labor efficiency variance ?

Question 4. Robbie Wallace is an inspector who earns a base salary of $3,600 per month plus a piece rate of 40 cents per bundle inspected. His company accounts for inspection costs as manufacturing overhead. Because of a payroll department error in June, Robbie was paid $2,700 plus a piece rate of 60 cents per bundle. He received gross wages totaling $3,780.
Hint: Robbie's compensation has both paid $2,700 plus a piece rate of 60 cents per bundle. He received gross wages totaling $3,780.
Hint: Robbie's compensation has both fixed and variable components.

Effect on variable overhead spending variance ?

Effect on fixed overhead budget variance ?

Question 5. The materials purchasing manager purchased 9,000 units of component K2X from a new source at a price $20 below the standard unit price of $200. These components turned out to be of extremely poor quality with defects occurring at three times the standard rate of 6%. The higher rate of defects reduced the output of workers (who earn $12 per hour) from 20 units per hour to 16 units per hour on the units containing the discount components. Each finished unit contains one K2X component. To appease the workers (who were irate at having to work with inferior components), the production manager agreed to pay the workers an additional $0.50 for each of the components (good and bad) in the discount batch. Variable manufacturing overhead is applied at the rate of $6.00 per direct labor hour. The defective units also caused a 25 hour increase in total machine hours. The actual cost of electricity to run the machines is $2.00 per hour.

Effect on materials price variance?

Effect on materials quantity variance?

Effect on labor rate variance?

Effect on labor efficiency variance?

Effect on variable overhead spending variance?

Effect on variable overhead efficiency variance?