Question

Lewis Company’s standard labor cost of producing one unit of Product DD is 3.40 hours at the rate of $13.80 per hour. During August, 43,700 hours of labor are incurred at a cost of $14.00 per hour to produce 12,600 units of Product DD.

(a)

Compute the total labor variance.

Total labor variance

$enter the Total labor variance in dollars

select an option Neither favorable nor unfavorableUnfavorableFavorable

(b)

Compute the labor price and quantity variances.

Labor price variance		$enter a dollar amount		select an option FavorableUnfavorableNeither favorable nor unfavorable
Labor quantity variance		$enter a dollar amount		select an option UnfavorableNeither favorable nor unfavorableFavorable

(c)

Compute the labor price and quantity variances, assuming the standard is 3.80 hours of direct labor at $14.20 per hour.

Labor price variance		$enter a dollar amount		select an option FavorableUnfavorableNeither favorable nor unfavorable
Labor quantity variance		$enter a dollar amount		select an option UnfavorableFavorableNeither favorable nor unfavorable

Answer 1

Requirement B

Total Labor variance

$         20,608.00

Unfavourable-U

Working

Total Labor Variance
(	Standard Cost	-	Actual Cost	)
(	$       591,192.00	-	$        611,800.00	)
	-20608
	Variance		$           20,608.00			Unfavourable-U

.

Requirement B

Labor price variance	$           8,740.00	Unfavourable-U
Labor Quantity variance	$         11,868.00	Unfavourable-U

Working

		12600	Meals
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct labor	43700	$         14.00	$       611,800.00

.

Standard DATA for		12600	Meals
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct labor	( 3.4 Hour x 12600 Meals)=42840 Hour	$           13.80	$          591,192.00

.

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                  13.80	-	$                   14.00	)	x	43700
	-8740
	Variance		$             8,740.00			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	42840	-	43700	)	x	$           13.80
	-11868
	Variance		$           11,868.00			Unfavourable-U

.

Requirement C

Labor price variance	$           8,740.00	Favourable-F
Labor Quantity variance	$         59,356.00	Favourable-F

Working

		12600	Meals
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct labor	43700	$         14.00	$       611,800.00

.

Standard DATA for		12600	Meals
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct labor	( 3.8 Hour x 12600 Meals)=47880 Hour	$           14.20	$          679,896.00

.

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                  14.20	-	$                   14.00	)	x	43700
	8740
	Variance		$             8,740.00			Favourable-F
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	47880	-	43700	)	x	$           14.20
	59356
	Variance		$           59,356.00			Favourable-F