Question

Required information [The following information applies to the questions displayed below.] A manufactured product has the following information for June. Standard Actual Direct materials (5 lbs. @ $8 per lb.) 42,000 lbs. @ $8.10 per lb. Direct labor (3 hrs. @ $16 per hr.) 24,700 hrs. @ $16.40 per hr. Overhead (3 hrs. @ $12 per hr.) $ 305,300 Units manufactured 8,300 Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorable. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate

Answer 1

Answer

Actual Cost								Standard Cost
AH	x	AR		AH	x	SR		SH	x	SR
24,700	x	$                16.40		24,700	x	$    16.00		24,900	x	$              16.00
	$   405,080.00				$     395,200.00				$    398,400.00
Rate Variance - Labor			$         9,880.00	Efficency Variance - Labor			$         3,200.00

Labor Rate Variance	$         9,880.00	Unfavourable
Labor Efficiency Variance	$         3,200.00	Favourable
Total Labor Cost [Spending] Variance	$         6,680.00	Unfavourable