Question

Exercise 11-6 (Video) Lewis Company's standard labor cost of producing one unit of Product DD is 3.10 hours at the rate of $12.50 per hour. During August, 42,000 hours of labor are incurred at a cost of $12.70 per hour to produce 13,400 units of Product DD. (a) Compute the total labor variance. Total labor variances (6) Compute the labor price and quantity variances. Labor price variance Labor quantity variances (c) Compute the labor price and quantity variances, assuming the standard is 3.30 hours of direct labor at $12.90 per hour. Labor price variance Labor quantity variances Click if you would like to show Work for this question: Open Show Work

Answer 1

Solution: laj Total cabor Varicence: A [standard hours & Standard rate -[Actual hours on Actual rate] = 3 [ 1540 X 12.50 - 42000 X 12-70) $. 14150 un favorable -standard hours = [ 13 400 x 3.10] 2 41540

(b) Labor price variance! Actual hours t Standard rate - Actual rate] x (12.5 - 12.7 x 42000 $ 8400 Unfavorable

Labor quantity Variance (standard hours - Actual hours Standard rate - Standard hours for actual production & [ 13400 3.10 41540 hourat then labor quantity Variance [ 41540 - 42000J X 12.50 7 $5750 unfavorable Lahor price variance Standard rate - Actual rate (x Actual hours >> (12.90 – 12.707 x 42000 7 8400 favorable Labor quantity Variance at Standard hours - Actual hours x Standard rate

Standard hours & [13400 × 3.3 44220 hours then, labour quantity Variance (44220-42000 x 3.30 = $ 7326 favorable