Question

Exercise 11-6 Lewis Company's standard labor cost of producing one unit of Product DD is 3.9 hours at the rate of $13.0 per hour. During August, 42,000 hours of labor are incurred at a cost of $13.20 per hour to produce 10,600 units of Product DD. Compute the total labor variance. Total labor variance 102 Compute the labor price and quantity variances. Labor price variance Labor quantity variance Compute the labor price and quantity variances, assuming the standard is 4.2 hours of direct labor at $13.40 per hour. Labor price variance Labor quantity variance

Answer 1

Variance Analvsis Data Standard Rate Standard hours per unit Standard Hours for Actual output Actual Output Actual hours Worked Actual Rate 13 Per hour 3.9 hours 41340 Hours 10600 Units 42000 hours AH AR 13.20 Per hour Total Labor Varaince: (SH*SR)-(AH-AR) (41340*13)-(42000*13.20) Labour Price Varaince (SR-AR)"AH-(13-13.2142000 Labour Quantity Varainc (SH-AH)*SR-(41340-42000)*13 16980 Unfavorable 8400 Unfavorable 8580 Unfavorable

13.4 Per hour Standard Rate Standard hours per unit Standard Hours for Actual output Actual Output Actual hours Worked Actual Rate 4.2 hours 44520 Hours 10600 Units 44000 hours AH AR 13.20 Per hour Labour Price Varaince (SR-AR)"AH-(13.4-13.20)"44000 Labour Quantity Varainc (SH-AH)*SR-(44520-44000)*13.40 8800 Favorable 6968 Favorable

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