8. Standard 1.
costs and standard and actual costs incurred for the manufacture of 8,000 units of product were as follows:
8,000 lbs. @ $30.00
7,750 lbs. @ $30.20
Direct labor: 10,000 hours @ $36.50
10,250 hours @ $38.00
Rates per direct labor hour,
based on 100% capacity of
16,000 labor hours:
$189,400 total variable cost
$100,000 total fixed cost
Determine (a) the quantity variance, price variance, and total direct materials cost variance; (b) the time variance, rate variance, and total direct labor cost variance.
9. Bell Company is considering the disposal of equipment that is no longer needed for operations. The equipment originally cost $500,000 and accumulated depreciation to date totals $360,000. An offer has been received to lease the machine for its remaining useful life for a total of $170,000, after which the equipment will have no salvage value. The repair, insurance, and property tax expenses during the period of the lease are estimated at $35,600. Alternatively, the equipment can be sold through a broker for $120,000 less a 10% commission.
Prepare a differential analysis report, dated June 15 of the current year, on whether the equipment should be leased or sold.