Question

Lewis Company’s standard labor cost of producing one unit of Product DD is 3.8 hours at the rate of $10.3 per hour. During August, 40,200 hours of labor are incurred at a cost of $10.50 per hour to produce 10,500 units of Product DD.

(a)

Compute the total labor variance.

Total labor variance

$enter a dollar amount of the total labor variance

select a type of the total variance UnfavorableFavorableNeither favorable nor unfavorable

(b)

Compute the labor price and quantity variances.

Labor price variance		$enter a dollar amount		select a type of the variance FavorableNeither favorable nor unfavorableUnfavorable
Labor quantity variance		$enter a dollar amount		select a type of the variance FavorableNeither favorable nor unfavorableUnfavorable

(c)

Compute the labor price and quantity variances, assuming the standard is 4.2 hours of direct labor at $10.70 per hour.

Labor price variance		$enter a dollar amount		select a type of the variance FavorableUnfavorableNeither favorable nor unfavorable
Labor quantity variance		$enter a dollar amount		select a type of the variance Neither favorable nor unfavorableFavorableUnfavorable

Answer 1

(a)

Compute the total labor variance.

Total labor variance

$410970-422100

11130

Unfavorable

(b)

Compute the labor price and quantity variances.

Labor price variance		(10.30-10.50)*40200	8040	Unfavorable
Labor quantity variance			3090	Unfavorable

(c)

Compute the labor price and quantity variances, assuming the standard is 4.2 hours of direct labor at $10.70 per hour.

Labor price variance		$8040		Favorable
Labor quantity variance		$41730		Favorable