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Lemke Music manufactures harmonicas. Lemke uses standard costs to judge performance. Recently, a clerk mistakenly threw away some of the records, and only partial data for October exist. Lemke knows that the total direct labor variance for the month was $$2,640U$ and that the standard labor rate was $$21$ per hour. A recent pay cut caused a favorable labor rate variance of $$0\mathrm{.}60$ per hour. The standard direct labor hours for actual October outputs were $5,290.$

Determine the actual number of direct labor hours worked by setting up the computation of the total direct labor variance as given. $($Enter the known amounts, then determine the missing amounts t solve for the actual direct labor hours. Enter the amounts as positive numbers. Label the flexible budget variance as favorable $(F)$ or unfavorable $($ S $)$ in the input field after the amount you enter.$)$

Lemke Music

Schedule to Compute Actual Direct Labor Hours

$\backslash$table$[[,$Actual,$\backslash$table$[[$Flexible budget$],[$for actual output$]],\backslash$table$[[$Flexible$],[$budget variance$]]],[$Direct labor hours,,$5,290,],[$Cost per hour,,,$],[$Total direct labor cost,,$111,090,],[$Flexible budget variance,,,$]]$

Requirement $2.$ Compute the direct labor rate and efficiency variances. Do these variances suggest that the manager may have made trade$-$offs? Explain. $($Enter the variances as positive numbers Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variance as favorable $($F$)$ or unfavorable $($ U $)$ in the input field after the amount you enter.

Abbreviations used: $DL=$ Direct labor.$)$

Begin by determining the formula for the price variance, then compute the price variance for direct labor.

$$

$-$ Actual rate $$

$)=$

DL rate variance $)=$

Now determine the formula for the efficiency variance, then compute the efficiency variance for direct labor.

$$

$$

$-)=$

DL efficiency variance $$

Lemke Music manufactures harmonicas. Lemke uses standard costs to judge performance. Recently, a clerk mistakenly threw away some of the records, and only partial data for October exist. Lemke knows that the total direct labor variance for the month was $$2,640U$ and that the standard labor rate was $$21$ per hour. A recent pay cut caused a favorable labor rate variance of $$0\mathrm{.}60$ per hour. The standard direct labor hours for actual October outputs were $5,290.$

Schedule to Compute Actual Direct Labor Hours

$\backslash$table$[[,$Actual,$\backslash$table$[[$Flexible budget$],[$for actual output$]],\backslash$table$[[$Flexible$],[$budget variance$]]],[$Direct labor hours,,$5,290,],[$Cost per hour,,$21,],[$Total direct labor cost,,$111,090,],[$Flexible budget variance,,,$2,640]]$

Requirement $2.$ Compute the direct labor rate and efficiency variances. Do these variances suggest that the manager may have made trade$-$offs? Explain. $($Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variance as favorable $($F$)$ or unfavorable $($U$)$ in the input field after the amount you enter.

Abbreviations used: DL $=$ Direct labor.$)$

Begin by determining the formula for the price variance, then compute the price variance for direct labor.

$$

$$ Actual rate $)=$

DL rate variance $)=$

Now determine the formula for the efficiency variance, then compute the efficiency variance for direct labor.

$-|)=$

DL efficiency variance $$

$$

Do these variances suggest that the manager may have made trade$-$offs? Explain.

The $$ direct labor rate variance combined with the $$ direct labor efficiency variance suggests that the manager may have used $$ workers. Due to the overall net effect, it appears that this may have been an unreasonable trade$-$off.

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