Question

Eyeglass Products, Inc. (EPI) produces eyeglass cleaner products. The company expects to pay $32.00 per hour for their direct labor. EPI's workforce worked 3,005.10 hours during the month of September and was paid $31.00 per hour. A standard of 2.70 hours of direct labor is expected to be used for each eyeglass cleaner product produced. Even though EPI expected to produce 1,137 finished produced, they actually produced 1,093 finished eyeglass cleaner products during the month of September. Round your final answers to the nearest whole dollar/input code: 0 - Enter a favorable variance as a positive number (no sign needed) - Enter an unfavorable variances as a negative number (minus sign in front of the digits) How much is the Rate Variance? $ How much is the Efficiency/Time Variance? \$

Answer 1

The Rate Variance for Eyeglass Products, Inc. for the month of September is a favorable $3,005, while the Efficiency/Time Variance is an unfavorable $1,760.

Step-by-step explanation:

To determine the Rate Variance and the Efficiency/Time Variance for Eyeglass Products, Inc., we need to calculate the difference between the standard labor cost and the actual labor cost for the actual production output.

Rate Variance Calculation

The standard rate is $32.00 per hour, but workers were paid $31.00 per hour. To find the Rate Variance, you multiply the actual hours worked by the difference between the standard rate and the actual rate:

Rate Variance = Actual Hours Worked x (Standard Rate - Actual Rate)

Rate Variance = 3,005.10 hours x ($32.00/hr - $31.00/hr)

Rate Variance = 3,005.10 hours x $1.00/hr

Rate Variance = $3,005 (Favorable)

Efficiency/Time Variance Calculation

The standard time to produce one unit is 2.70 hours, and EPI produced 1,093 units. The standard hours for actual production are:

Standard Hours for Actual Production = Standard Hours per Unit x Actual Units Produced

Standard Hours for Actual Production = 2.70 hours/unit x 1,093 units

Standard Hours for Actual Production = 2,950.10 hours

Now, subtract the standard hours for actual production from the actual hours worked to find the Efficiency Variance:

Efficiency/Time Variance = Actual Hours Worked - Standard Hours for Actual Production

Efficiency/Time Variance = 3,005.10 hours - 2,950.10 hours

Efficiency/Time Variance = 55 hours

To calculate the cost associated with this variance, multiply the difference by the standard rate:

Efficiency/Time Variance Cost = 55 hours x $32.00/hr

Efficiency/Time Variance Cost = $1,760 (Unfavorable)