EXERCISE 10-10 (20 MINUTES)

1. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH10 STANDARD COST AND THE BALANCE SCORECARD
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH10 STANDARD COST AND THE BALANCE SCORECARD
1. If the total variance is $93 unfavorable, and the rate variance is $87 fa-vorable, then the efficiency variance must be $180 unfavorable, since the rate and efficiency variances taken together always equal the total variance. Knowing that the efficiency variance is $180 unfavorable, one approach to the solution would be: Efficiency variance = SR (AH – SH) $9.00 per hour (AH – 125 hours*) = $180 U $9.00 per hour × AH – $1,125 = $180** $9.00 per hour × AH = $1,305 AH = $1,305 ÷ $9.00 per hour AH = 145 hours *50 jobs × 2.5 hours per job = 125 hours **When used with the formula, unfavorable variances are positive and fa-vorable variances are negative.