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Flexible Budgets and Direct Labor Variances Duo Co. has the following processing standards for its clerical employees:
Number of hours per 1,000 papers processed
150
Normal number of papers processed per year
1,500,000
Wage rate per 1,000 papers
$1,200
Total standard variable cost (including labor) of processing 1,500,000 papers
$2,700,000
Fixed costs per year
$150,000
The following information pertains to the 1,200,000 papers processed during the year:
Total cost
$1,995,000
Labor cost
$1,710,000
Labor hours
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.
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