ACCT346 Week 6 Homework Assignment Question 1.  The Von Pottasnevitch Company sells office

ACCT346 Week 6 Homework 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

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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:

Standard direct labor rate per hour $ 18.50 per hour
Standard direct labor hours per boomerang 0.4 hours

During the month of January, the company produced 1,800 boomerangs. Actual production data for the month follows:

Actual direct labor hours worked 700 hours
Actual direct labor cost incurred $ 14,000

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?