Determining direct labor variances


Direct labor variances to help control operations, Sisyphus Company developed a standard costing system in its job shop. Data for a recent job follows.



Direct labor hours



Direct labor dollars



Units produced




Calculate the direct labor price and efficiency variances and determine whether they are favorable or unfavorable.

Direct material variances The Ningpo Manufacturing Company is a joint venture between U.S. and Chinese firms with an assembly plant located in Ningpo, on the eastern coast of China. The company's managers expected to produce 20,000 units of product in March. The standard cost for the materials used for 20,000 units is 173,600 yuan, and the standard cost per unit is 2.80 yuan per pound. Actual production in March was 19,100 units. The company purchased and used 57,300 pounds of materials costing 163,305 yuan.


1. What was the standard quantity of pounds per unit?

2. What was the direct materials efficiency variance for March?

3. What was the direct materials price variance for March?

Agency theory and responsibility accounting: Exercise 15.16

Responsibility centers, agency theory, and performance measures Your brother recently bought a small business with several coffee carts located around the city. Two workers share responsibility for each cart. All beverages are prepared using identical recipes and ingredients, but the baked goods and other items sold by each cart are chosen by the employees who operate the carts each day. Your brother asked your advice in determining how best to compensate the employees. He thinks he should give them bonuses when costs are contained, and pay them a flat salary otherwise.


A. What type of responsibility center is each cart?

B. Explain how agency theory relates to your brother's situation.

C. List several financial performance measures that might be relevant for measuring employee performance.

D. List one nonfinancial measure that might be important to the success of this business.

Solution Preview :

Prepared by a verified Expert
Accounting Basics: Determining direct labor variances
Reference No:- TGS02051931

Now Priced at $10 (50% Discount)

Recommended (99%)

Rated (4.3/5)

2015 ©TutorsGlobe All rights reserved. TutorsGlobe Rated 4.8/5 based on 34139 reviews.