Question

Question 3 --/18 View Policies Current Attempt in Progress Lewis Company's standard labor cost of producing one unit of Product DD is 3.9 hours at the rate of $ 10.0 per hour. During August, 41,200 hours of labor are incurred at a cost of $10.20 per hour to produce 10,500 units of Product DD. (a) Compute the total labor variance. Total labor variance (b) Compute the labor price and quantity variances. Labor price variance $ Labor quantity variance $ (c) Compute the labor price and quantity variances, assuming the standard is 4.2 hours of direct labor at $10.40 per hour. Labor price variance $ Labor quantity variance $ tA tA

Answer 1

Standard labor hours require per unit Actual units produced Standard labor hours required (SH) 3.9 hours 10,500 units (10,500 x 3.9) 40,950 hours 10.0 41,200 10.20 Standard rater per hour (SR) Actual labor hours (AH) Actual rate per hour (AR) (a) Total Labor Variance (AHAR) - (SH X SR) (41,200 x $ 10.20) - (40,950 x $ 10) 10,740 Total Labor Variance 10,740 Unfavorable (b) Labor price variance AH X (AR-SR) 41,200 x ($ 10.20 - $ 10.00) 8,240 $ Labor price variance 8,240 Unfavorable Labor Quantity variance SRX (AH-SH) $ 10 x (41,200 - 40,950) 2,500 Labor Quantity variance 2,500 Unfavorable

Standard labor hours require per unit Actual units produced Standard labor hours required (SH) 4.2 hours 10,500 units (10,500 x 4.2) $ Standard rater per hour (SR) Actual labor hours (AH) Actual rate per hour (AR) 44,100 hours 10.40 41,200 10.20 Labor price variance AH (AR-SR) 41,200 x ($ 10.20 - $ 10.40) (8,240) Labor price variance 8,240 Favorable Labor Quantity variance SRX (AH-SH) $ 10.40 x (41,200 - 44,100) (30,160) Labor Quantity variance 30,160 Favorable