Question

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A manufactured product has the following information for June. Standard (5 lbs.@$7 per lb.) (3 hrs.@ $15 per hr.) (3 hrs. @ $11 per hr.) Actual lbs.@$710 per Direct materials 39,600, Ib hrs. @ $15.40 per 23,100 hr. Direct labor Overhead $262.700 Units 7,800 manufactured

Answer 1

Ans.	Actual Cost		Actual hours at Standard rate		Standard Cost
	Actual hours * Actual rate		Actual hours * Standard rate		Standard hours * Standard rate
	23,100 * $15.40		23,100 * $15		23,400 * $15
	$355,740		$346,500		$351,000
		-$9,240		$4,500
	Labor rate variance	-$9,240	or   $9,240 Unfavorable
	Labor efficiency variance	$4,500	or   $4,500 Favorable
	Total Labor Variance	-$4,740	or   $4,740 Unfavorable
	*Labor rate variance = Actual quantity at standard price - Actual cost
	*Labor efficiency variance = Standard cost - Actual quantity at standard price
	*Total labor variance = Labor rate variance + Labor efficiency variance
	Standard hours = Actual output * standard hours per unit of output
	7,800 units * 3 hours
	23,400 hours
	*If the standard cost, rate and hours are higher than the actual it means the variance is favorable.
	*If the standard cost, rate and hours are lower than the actual it means the variance is unfavorable.