Question

Information regarding Maxwell’s direct labor cost for the month of January follows: Direct labor hourly rate paid $ 29.90 Total standard direct labor hours for units produced this period 12,400 Direct labor hours actually worked 12,200 Direct labor rate variance $ 17,400 favorable Required: 1. Compute the standard direct labor wage rate per hour in January. (Round your answer to 2 decimal places.) 2. Compute the direct labor efficiency variance for January. Was this variance favorable (F) or unfavorable (U)? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

Answer 1

A. $31.81

B.6,362 F

Step-by-step explanation:

Total actual direct labor hours (DLHs) worked (given)12,400

Actual hourly rate (given)× 29.90

Total actual total direct labor cost $370,760

Plus: Favorable direct labor rate variance (given)+ 17,400

Total actual direct labor hours at standard hourly rate$388,160

Total actual direct labor hours worked (given)÷ 12,200

Standard direct labor rate per hour (to two decimal places)$31.81

2.Direct labor efficiencyvariance = actual hours at standard cost − standard labor cost for units produced

= [(AQ) × (SP)] − [(SQ) × (SP)]= [12,200 hrs. × $31.81/hour] − [12,400 hrs. × $31.81/hr.]

=388,082-394,444

= $6,362F (to the nearest whole dollar)