Caswell Company employs direct labor in two of its processing departments. Data regarding direct labor usage in the most recent period have been assembled and reported below.
Required:
Compute the rate and efficiency variances for each of the processing departments. Indicate whether each variance is favorable or unfavorable.

Question

Caswell Company employs direct labor in two of its processing departments. Data regarding direct labor usage in the most recent period have been assembled and reported below.
  Required:
Compute the rate and efficiency variances for each of the processing departments. Indicate whether each variance is favorable or unfavorable.

Quizplus · Accepted Answer

The Answer is
Fabricating:
Rate variance = ($28 x 13,000) - ($30 x 13,000) = $26,000 F
Efficiency variance = ($30 x 13,000) - ($30 x 12,000) = $30,000 U
Assembly:
Rate variance = ($29 x 8,400) - ($28 x 8,400) = $8,400 U
Efficiency variance = ($28 x 8,400) - ($28 x 9,000) = $16,800 F

Caswell Company Employs Direct Labor in Two of Its Processing