Question

QUESTION 4 Alex Company manufactures boats in bottles (to sell to rich people who don't have the time to make them themselves). For their standard costing system they allow 5 hours of direct labor per bottle at a wage of $12 per hour. The last batch only took 4.5 hours per bottle. They made 12 bottles. However, they ended up paying employees $12 per hour. What is the standard cost for labor per bottle? (in dollars per bottle)

Answer 1

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Alex Company
Labor hours per bottle	12.00	A
Labor hour rate	5.00	B
Standard labor cost of 1 bottle	60.00	C=A*B
New Tone
Budgeted Labor Hour per unit
Budgeted Hours	20,000.00	D
Budgeted units	10,000.00	E
Budgeted Labor Hour per unit	2.00	F=D/E
Budgeted Labor Hour rate
Budgeted Payroll	333,000.00	G
Budgeted Hours	20,000.00	D
Budgeted Labor Hour rate	16.65	H=G/D
Direct Labor Variance	Finished Units	Hour per unit	Hour required	Rate per Hour	Amount
Standard Hours allowed for Actual Output at Standard Rate	8,000.00	2.00	16,000.00	16.65	266,400.00	I
Actual Hours of Input, at Standard Rate			20,000.00	16.65	333,000.00	J
Efficiency Variance (J-I)					66,600.00	Unfavorable
Elisabeth Company
Total variance	Amount $
Material Price Variance	4,000.00	Unfavorable
Material Usage Variance	4,000.00	Unfavorable
Labor Rate Variance	(1,000.00)	Favorable
Labor Efficiency Variance	3,000.00	Unfavorable
Total variance for 20X1	10,000.00	Unfavorable	K
Total variance for the year is the Unfavorable so Cost of goods sold will increase by $ 10,000.
Adjusted cost of goods sold	Amount $
Unadjusted cost of goods sold	90,000.00	L
Total variance for the year	10,000.00	See K
Adjusted cost of goods sold	100,000.00	M=L+K