Labor Rate and Efficiency Variances Keck Company’s direct labor costs to manufacture its only product in October follow:
Standard direct labor hours per unit of product | 1.5 |
Number of finished units produced | 10,000 |
Standard wage rate per direct labor hour | $16 |
Total payroll for direct labor | $207,000 |
Wage paid per direct labor hour | $18 |
Differences in hourly wage rates reflect skill levels of workers.
Required Determine the following for October:
1. Direct labor rate variance.
2. Direct labor efficiency variance.
3. Production manager’s performance in managing direct labor costs.
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