Flexible Budgets and Direct Labor Variances Duo Co. has the following processing standards for its clerical employees:
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Number of hours per 1,000 papers processed
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150
|
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Normal number of papers processed per year
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1,500,000
|
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Wage rate per 1,000 papers
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$1,200
|
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Total standard variable cost (including labor) of processing 1,500,000 papers
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$2,700,000
|
|
Fixed costs per year
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$150,000
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The following information pertains to the 1,200,000 papers processed during the year:
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Total cost
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$1,995,000
|
|
Labor cost
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$1,710,000
|
|
Labor hours
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190,000
|
Required: Prepare an Excel spreadsheet that can be used to compute for Duo Co. the following:
1. Expected total cost for the year to process 1,200,000 papers, assuming standard performance.
2. Labor rate variance for the year.
3. Labor efficiency variance for the year.