Question

Mordica Company’s standard labor cost per unit of output is $22.00 (2.00 hours x $11.00 per hour). During August, the company incurs 2,640 hours of direct labor at an hourly cost of $9.90 per hour in making 1,200 units of finished product. Compute the total, price, and quantity labor variances. (Round answers to 2 decimal places, e.g. 52.75.) Total labor variance $enter a dollar amount rounded to 2 decimal places select an option Labor price variance $enter a dollar amount rounded to 2 decimal places select an option Labor quantity variance $enter a dollar amount rounded to 2 decimal places select an option

Answer 1

a. $264 unfavorable

b. $2,904 unfavorable

c. $2,640 Unfavorable

Step-by-step explanation:

a. ($11.00 × (1,200 × 2)) - ($9.90 × 2,640)

b. ($11.00 - $9.90) × 2,640

c. $11.00 × ((1,200 × 2) - 2,640)

Answer 2

$264 Favorable

$2,904 Favorable

$2,640 Unfavorable

Step-by-step explanation:

The computation of Total labor variance, Labor price variance and Labor quantity variance is shown below:-

Total labor variance = (Standard rate × Standard hours) - (Actual rate × Actual hours)

= ($11.00 × (1,200 × 2)) - ($9.90 × 2,640)

= $26,400 - $26,136

= $264 Favorable

Labor price variance = (Standard rate - Actual rate) × Actual hours

= ($11.00 - $9.90) × 2,640

= $1.10 × 2,640

= $2,904 Favorable

Labor quantity variance = Standard rate × (Standard hours - Actual hours)

= $11.00 × ((1,200 × 2) - 2,640)

= $11.00 × (2,400 - 2,640)

= $11.00 × -$240

= $2,640 Unfavorable