Question

Total Labor Variance Tico Inc. produces plastic bottles. Each bottle has a standard labor requirement of 0.01 hours. During the month of April, 550,000 bottles were produced using 13,000 labor hours @ $8.50. The standard wage rate is $7.50 per hour. Required: Calculate the total variance for production labor for the month of April. Enter amounts as positive numbers. If required, round your answer to the nearest cent. $

Answer 1

Total variance= 69,250 unfavorable

Step-by-step explanation:

Giving the following information:

Each bottle has a standard labor requirement of 0.01 hours. During April, 550,000 bottles were produced using 13,000 labor hours for $8.50. The standard wage rate is $7.50 per hour.

Direct labor efficiency variance= (SQ - AQ)*standard rate

Direct labor efficiency variance= (5,500 - 13,000)*7.5= 56,250 unfavorable

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor rate variance= (7.5 - 8.5)*13,000= 13,000 unfavorable

Total variance= 69,250 unfavorable