Two-Variance Analysis and Direct Labor Variance Marilyn, Inc., uses a standard cost system and analyzes overhead using a two-variance analysis. The following information relates to its operations in April:
Actual total cost for direct labor | $86,800 |
Total direct labor hours worked | 14,000 |
Total standard labor hours for the output in April | 15,000 |
Direct labor rate variance—unfavorable | $2,800 |
Actual total overhead cost | $32,000 |
Budgeted fixed overhead cost | $9,000 |
Practical capacity, in hours | 12,000 |
Total overhead application rate per standard direct labor hour | $2.25 |
Note: For the analysis of the total overhead variance, set up a model similar to the one presented in Exhibit 15.17 .
Required
1. What was Marilyn’s direct labor efficiency variance for April?
2. What was Marilyn’s factory overhead flexible-budget variance for April?
3. What was Marilyn’s production-volume variance for April?
4. What is the relationship between the direct labor efficiency variance and the variable overhead efficiency variance?
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