Question

The standard cost card of a particular product specifies that it requires 4.5 direct labor-hours at $12.80 per direct labor-hour. During March, 2,300 units of the product were produced and direct labor wages of $128,300 were incurred. A total of 11,700 direct labor-hours were worked. The direct labor variances for the month were:

Answer 1

Total Labor Variance

rate variance $21,460.00 F

efficiency variance $(17,280.00) U

Total Labor Variance 4,180.00 F

Step-by-step explanation:

`(standard\:rate-actual\:rate) * actual \: hours = DL \: rate \: variance`

std rate $12.80

actual rate $10.97 (128,300 actual cost /11,700 actual hours)

actual hours 11,700

difference $1.83

rate variance $21,460.00

The difference between actual rate and standard rate is positive, the labor hour cost less. the variance is favorable

`(standard\:hours-actual\:hours) * standard \: rate = DL \: efficiency \: variance`

std hours 10350.00 (2,300 units x 4.5 hours per unit)

actual hours 11700.00

std rate $12.80

difference -1350.00

efficiency variance $(17,280.00)

The difference is negative, it takes more hours than expected to produce te 2,300 units the variance is unfavorable

Total Labor Variance

rate variance $21,460.00

efficiency variance $(17,280.00)

4,180.00