In all of the exercises involving variances, use “F” and “U” to designate favorable and...

In all of the exercises involving variances, use “F” and “U” to designate favorable and unfavorable variances, respectively.

Computing labor variances

Hoist Inc. manufactures garage doors for homes. The standard quantity of direct labor to manufacture a door is 4.5 hours. The standard hourly wage in this department is $12.50 per hour. During August, 6,100 doors were produced. The payroll records indicate that 31,110 hours were worked at a total cost for payroll of $411,274.20.

Calculate the following, using the “goalpost” diagram format shown in Figure 8-4 to compute variances:

1. Labor rate variance.

2. Labor efficiency variance.

3. Net labor variance.

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