EXERCISE 10-3 (20 MINUTES)

2. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH10 STANDARD COST AND THE BALANCE SCORECARD
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH10 STANDARD COST AND THE BALANCE SCORECARD
2. Actual Hours of Standard Hours Input, at the Allowed for Output, at Actual Rate Actual Hours of Input, at the Standard Ratethe Standard Rate (AH × AR) (AH × SR) (SH × SR) 960 hours × $10.00 per hour 960 hours × $9.75 per hour 1,000 hours × $9.75 per hour = $9,600 = $9,360 = $9,750 ↑ ↑ ↑Rate Variance, $240 U Efficiency Variance, $390 F Total Variance, $150 F Alternatively, the variances can be computed using the formulas: Labor rate variance = AH(AR – SR) = 960 hours ($10.00 per hour – $9.75 per hour) = $240 U Labor efficiency variance = SR(AH – SH) = $9.75 per hour (960 hours – 1,000 hours) = $390 F