Assignment -
Question 1 - The Von Pottasnevitch Company sells office products and for the most part has a regular group of customers and fairly predictable sales. Many of the company's customers are offered credit, while other clients do business on a cash basis. The company's monthly sales are consistently split between 10% cash business and 90% on credit. The credit sales are collected 50% in the same month of the sale and the remaining 50% is due the following month. Sales for the upcoming first quarter of the next year are estimated as follows:
January: $100,000
February: $200,000
March: $150,000
Calculate the expected cash collections for February.
Question 2 - The Walkabout Corporation manufactures boomerangs (its only product). The company's standards for manufacturing boomerangs are as follows:
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Standard direct labor rate per hour
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$ 18.50 per hour
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Standard direct labor hours per boomerang
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0.4 hours
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During the month of January, the company produced 1,800 boomerangs. Actual production data for the month follows:
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Actual direct labor hours worked
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700 hours
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Actual direct labor cost incurred
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$ 14,000
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Part A. Calculate the labor rate variance for the month. Is it favorable or unfavorable?
Part B. Calculate the labor efficiency variance for the month. Is it favorable or unfavorable?