Question

Javonte Co. set standards of 2 hours of direct labor per unit of product and $15.80 per hour for the labor rate. During October, the company uses 12,100 hours of direct laborat a $193,600 total cost to produce 6,400 units of product. In November, the company uses 16,100 hours of direct laborata $258,405 total cost to produce 6,800 units of product. AHActual Hours SH - Standard Hours AR - Actual Rate SR Standard Rate (1) Compute the direct laborate variance, the direct labor efficiency variance, and the total direct labor cost variance for each of these two months. Classify each variance as favorable or unfavorable. (2) Javonte investigates variances of more than 5% of actual direct labor cost. Which direct labor variances will the company investigate further? Complete this question by entering your answers in the tabs below. Required Required 2 Compute the direct laborate variance, the direct labor efficiency variance, and the total direct laber cost variance for each of these two months. Classily each variance as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance) Actual Cost Standard Cast Next > < Prev 90 5 of 10 .9 e Search or enter address + 3 4 5 - WERT Y U 1 0 P H zxcv command option command

thanks to anyone who helps

Answer 1

Part 1

October
AH		AR		AH		SR		SH		SR
12100		16		12100		15.80		12800		15.80
	193600				191180				202240
			2420				11060
Direct labor rate variance				2420	U
Direct labor efficiency variance				11060	F
Direct labor variance				8640	F

AR = 193600/12100 = 16

SH = 6400*2 = 12800

November
AH		AR		AH		SR		SH		SR
16100		16.05		16100		15.80		13600		15.80
	258405				254380				214880
			4025				39500
Direct labor rate variance				4025	U
Direct labor efficiency variance				39500	U
Direct labor variance				43525	U

AR = 258405/16100 = 16.05

SH = 6800*2 = 13600

Part 2

Direct labor efficiency variance should be investigated further

Direct labor efficiency variance = 11060/202240 = 5.47%

Direct labor efficiency variance = 39500/214880 = 18.38%