Question

Required information The following information applies to the questions displayed below) A manufactured product has the following information for June Direct materials Direct labor Overhead Units manufactured Standard Actual 7 lbs. @ $8 per lb. 51,lbs. @ $8.1e per lb. 3 hrs. @ $15 per hr. 21,400 h 4 hrs. @ $15.40 per hr. 3 hrs. @ $13 per hr. $286,400 7,200 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 Acta COSI Standard Cost

Answer 1

computation of Direct labour rate variance and rect labour efficiency variance Given data of Direct labor is as follows Standard Rate per hour (SR) = $ 15 Actual rate per hour (AR) = $ 15.HO Standard hours for actual output (SH) For I unit - 3 hrs For 7200 units - 2 = 7200 x 3 = 21600 hrs SH Actual hours worked (AH) = 21400 hrs. units manufactured = 7200 Direct Labor Rate variance Standard Rate - Actual Rate) Actual hours! worked = (S.R-AR) A.H. = ($15 - $ 15.40) 21400 hrs = - $ 8560 ( unfavorable) Direct Labor Rate variance = - $ 8560 (unfavorable)

Direct Labor Efficiency variance (Standard hours - Actual hours) Standard rate per hol = (SH- A-H) SR = (21600 hrs - 21400 hrs) $ 15 = = (200 hrs) $ 15 $ 3000 ( Favorable) Direct Labor Efficiency variance = $ 3000 (Favorable)