Amos, Inc. uses a standard cost system with the following labor standards for one unit of...
Amos, Inc. uses a standard cost system with the following labor
standards for one unit of product: standard hours 0.3 and standard
wage rate $8. During January, Amos incurred 5,767 hours of direct
labor and paid $45,575 in wages in production of 18,900
units.
Calculate the direct labor rate and efficiency variances and
indicate whether the variances are favorable or
unfavorable.
| Direct labor rate variance | $
|
|
|
| Direct labor efficiency variance | $
|
|
Homework Answers
Solution
| Labor rate variance | $ 561.00 | Favourable-F |
| Labor Efficiency variance | $ 776.00 | Unfavourable-U |
Working
| Actual DATA for | 18900 | Units | |
| Quantity (AQ) | Rate (AR) | Actual Cost | |
| Direct labor | 5767 | $ 7.90 | $ 45,575.00 |
.
| Standard DATA for | 18900 | Units | |
| Quantity (SQ) | Rate (SR) | Standard Cost | |
| [A] | [B] | [A x B] | |
| Direct labor | ( 0.3 Hour x 18900 Units)=5670 Hour | $ 8.00 | $ 45,360.00 |
.
| Labor Rate Variance | ||||||
| ( | Standard Rate | - | Actual Rate | ) | x | Actual Labor Hours |
| ( | $ 8.00 | - | $ 7.90 | ) | x | 5767 |
| 561 | ||||||
| Variance | $ 561.00 | Favourable-F | ||||
| Labour Efficiency Variance | ||||||
| ( | Standard Hours | - | Actual Hours | ) | x | Standard Rate |
| ( | 5670 | - | 5767 | ) | x | $ 8.00 |
| -776 | ||||||
| Variance | $ 776.00 | Unfavourable-U | ||||
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