Question

CALCULATOR PRINTER VERBON I ACK Exercise 11-6 (Video) Lewis Company's standard labor cost of producing one $13.25 per hour to produce 11,200 units of Product DD. of Product Dis 16 hours at the rate $12.10 per hour During August, 40.600 hours of labor are incurred at a cost of (a) Compute the total labor variance Total labor variance (b) Compute the labor price and quantity variances. Labor price variance Labor quantity variance Compute the labor price and quantity variance, assuming the standard is 3.90 hours of direct laborat $13.35 per hour Labor price variance Labor quantity variance

Answer 1

Answer

• Working

>Actual Labor cost = 40600 hours x $ 13.25 = $ 537,950
>Standard labor cost = 11200 units x 3.60 hours x $ 13.10 = $ 528,192

• Requirement [a]
  Total Labor Variance = $ 9758 Unfavourable, because actual cost is MORE than Standard cost. [537950 – 528192]
• Requirement [b]

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                              13.10	-	$                    13.25	)	x	40600
	-6090
	Variance		$              6,090.00			Unfavourable-U

Labour Quantity Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	40320	-	40600	)	x	$                        13.10
	-3668
	Variance		$              3,668.00			Unfavourable-U

• Requirement [c]

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                              13.35	-	$                    13.25	)	x	40600
	4060
	Variance		$              4,060.00			Favourable-F
Labour Quantity Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	43680	-	40600	)	x	$                        13.35
	41118
	Variance		$            41,118.00			Favourable-F