Answer:
(a) $106,000 Unfavorable
(b) $194,000 Favorable
(c) $35,000 Unfavorable
Step-by-step explanation:
Given that,
Standard labor-hours allowed per unit of output = 2.0
Standard variable overhead rate per standard direct labor-hour = $ 35
Good units produced = 60,000
Actual direct labor-hours worked = 121,000
Actual total direct labor = $ 5,551,000
Direct labor efficiency variance = $45,000 U
Actual variable overhead = $4,041,000
Firstly, we need to calculate the standard rate. It is calculated by using the formula for Direct labor efficiency variance:
Direct labor efficiency variance = (Standard hour - Actual hour) × Standard rate
-$45,000 = (Standard hour* - Actual hour) × Standard rate
-$45,000 = (120,000 - 121,000) × Standard rate
($45,000 ÷ 1,000) = Standard rate
$45 = Standard rate
*Standard hours:
= Standard labor-hours allowed per unit of output × No. of units produced
= 2 × 60,000
= 120,000
(a) The direct labor rate variance is calculated by the following formula:
= (Standard rate × Actual direct labor-hours worked) - Actual total direct labor
= ($45 × 121,000) - $ 5,551,000
= $5,445,000 - $5,551,000
= $106,000 Unfavorable
(b) The variable overhead rate variance is calculated by the formula below:
= (Standard variable overhead rate per standard direct labor-hour × Actual direct labor-hours worked) - Actual variable overhead
= ($35 × 121,000) - $4,041,000
= $4,235,000 - $4,041,000
= $194,000 Favorable
(c) The Variable overhead efficiency variance is calculated by the following formula:
= (Standard hours - Actual direct labor-hours worked) × Standard Variable Overhead rate per hour
= (120,000 - 121,000) × $35
= $35,000 Unfavorable