Question

Cheyenne Company’s standard labor cost of producing one unit of Product DD is 3.9 hours at the rate of $10.0 per hour. During August, 41,200 hours of labor are incurred at a cost of $10.20 per hour to produce 10,500 units of Product DD.

Compute the total labor variance. Total labor variance $ UnfavorableNeither favorable nor unfavorableFavorable

Compute the labor price and quantity variances. Labor price variance $ FavorableNeither favorable nor unfavorableUnfavorable Labor quantity variance $ FavorableNeither favorable nor unfavorableUnfavorable

Compute the labor price and quantity variances, assuming the standard is 4.2 hours of direct labor at $10.40 per hour. Labor price variance $ FavorableUnfavorableNeither favorable nor unfavorable Labor quantity variance $ FavorableUnfavorableNeither favorable nor unfavorable

Answer 1

Answers

• Total Labor Variance

Total Labor Variance
(	Standard Cost = 10500 units x 3.9 hrs x $ 10	-	Actual Cost = 41200 hrs x $ 10.20	)
(	$                   409,500.00	-	$          420,240.00	)
	-10740
	Variance		$            10,740.00			Unfavourable-U

• Requirement 1

Labor Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                              10.00	-	$                    10.20	)	x	41200
	-8240
	Variance		$              8,240.00			Unfavourable-U
Labour Quantity Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	40950	-	41200	)	x	$                        10.00
	-2500
	Variance		$              2,500.00			Unfavourable-U

• Requirement 2

Labor Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                              10.40	-	$                    10.20	)	x	41200
	8240
	Variance		$              8,240.00			Favourable-F
Labour Qty Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	44100	-	41200	)	x	$                        10.40
	30160
	Variance		$            30,160.00			Favourable-F