When auto manufacturer BMW purchased the RollsRoyce brand name, BMW had to hire and train a new staff of assembly workers. The new workers were paid per hour, worked a total of hours, and produced cars. BMW budgeted for a standard labor rate of per hour and direct labor hours per car. What is the direct labor rate variance for the RollsRoyce division?

Complete Question:

When auto manufacturer BMW purchased the Rolls-Royce brand name, BMW had to hire and train a new staff of assembly workers. The new workers were paid $25 per hour, worked a total of 7,500 hours, and produced 2,000 cars. BMW budgeted for a standard labor rate of $27 per hour and 1.25 direct labor hours per car.

What is the direct labor rate variance for the Rolls-Royce division?

$15,000 Favorable Variance

Explanation:

As we know that:

Labor Rate Variance = (Actual Rate per Hour − Standard Rate per Hour) * Actual Hours Worked

If we consider the parenthesis elements in the formula, we can decide whether the variance is favorable or adverse. If the actual cost is higher than the budget (standard) then the variance (difference) is adverse and vice versa.

Here

Actual rate per hour is $25 per Hour

Standard rate per hour is $27 per Hour

Actual Hours Worked are 7,500 Hour

By putting values, we have:

Labor Rate Variance = ($25 − $27) * 7,500 Hrs

Labor Rate Variance = ($2 per share) * 7,500 Hrs

Labor Rate Variance = $15,000 Favorable

As the actual labor rate is lower than the standard rate hence the variance is favorable.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

answer; sales of books;