Question

Required information [The following information applies to the questions displayed below.] A manufactured product has the following information for June. Standard Actual Direct materials 5 lbs. @ $9 per lb. 40,400 lbs. @ $9.20 per lb. Direct labor 3 hrs. @ $15 per hr. 23,700 hrs. @ $15.60 per hr. Overhead 3 hrs. @ $12 per hr. $ 294,800 Units manufactured 8,000 Compute the direct labor rate variance and the direct labor efficiency variance. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Rate per hour" answers to 2 decimal places.) AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate

A manufactured product has the following information for June. Standard Actual 5 lbs.@ $9 per lb 3 hrs.@ $15 per hr. 3 hrs. @ $12 per hr. 40,400 lbs. @ $9.20 per lb 23,700 hrs. @ $15.60 per hr. $294,800 8,000 Direct materials Direct labor Overhead Units manufactured Compute the direct labor rate variance and the direct labor efficiency variance. (Indicate the effect of each variance b selecting for favorable, unfavorable, and no variance. Round "Rate per hour" answers to 2 decimal places.) AH Actual Hours SH Standard Hours AR Actual Rate SR Standard Rate Actual Cost Standard Cost

Answer 1

Labour Rate variance: Labour Rate variance = Actual cost - Standard cost for actual hrs Labour Rate variance = (AH*AR) - (AH'SR) Labour Rate variance =((23700*15.60)-(1523700)) Labour Rate variance = 369720-355500 Labour Rate variance = $ 14,220 Favourable Labour efficiency variance: Labour efficiency variance=Standard Rate * (Actual Hrs - Standard Hrs) Labour efficiency variance=SR (AH-SH) Labour efficiency variance = (15 (23700-(8000*3))) Labour efficiency variance =(15*(23700-24000)) Labour efficiency variance =(15-300) Labour efficiency variance = $ 4,500 Unfavourable