Question

Drop down box options: Favorable, Unfavorable, Neither Favorable or Unfavorable

Lewis Company's standard labor cost of producing one unit of Product DD is 3.90 hours at the rate of $13.20 per hour. During August, 40,800 hours of labor are incurred at a cost of $13.30 per hour to produce 10,300 units of Product DD. (a) Compute the total labor variance. Total labor variance (b) Compute the labor price and quantity variances. Labor price variance Labor quantity variance Compute the labor price and quantity variances, assuming the standard is 4.20 hours of direct labor at $13.50 per hour. Labor price variance Labor quantity variance

Answer 1

Requirement a

Total Labor variance

$         12,396.00

Unfavourable-U

Requirement b

Labor price variance	$           4,080.00	Unfavourable-U
Labor Quantity variance	$           8,316.00	Unfavourable-U

Requirement c

Labor Price variance	$           8,160.00	Favourable-F
Labor Quantity variance	$         33,210.00	Favourable-F

.

Working for Requirement a and b

Actual DATA for		10300	Items
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct labor	40800	$         13.30	$       542,640.00

.

Standard DATA for		10300	Items
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct labor	( 3.9 Hour x 10300 Items)=40170 Hour	$                13.20	$          530,244.00

.

Labor Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                  13.20	-	$                   13.30	)	x	40800
	-4080
	Variance		$             4,080.00			Unfavourable-U
Labour Quantity Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	40170	-	40800	)	x	$           13.20
	-8316
	Variance		$             8,316.00			Unfavourable-U
Total Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$       530,244.00	-	$        542,640.00	)
	-12396
	Variance		$           12,396.00			Unfavourable-U

.Requirement c Working

Labor Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                  13.50	-	$                   13.30	)	x	40800
	8160
	Variance		$             8,160.00			Favourable-F
Labour Quantity Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	43260	-	40800	)	x	$           13.50
	33210
	Variance		$           33,210.00			Favourable-F

.

Standard DATA for		10300	Items
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct labor	( 4.2 Hour x 10300 Items)=43260 Hour	$                13.50	$          584,010.00