Question

Hickam Company makes one product, for which it has developed the following standard for labor: each unit should require 1.50 hours at $12/hour. In April, Hickam made 10,000 units, using 1.65 hours per unit at a cost of $11.50 per hour. What is the labor usage variance

Answer 1

$1.8 Unfavourable

Step-by-step explanation:

Labor usage variance can be calculated by deducting Standard hours from Actual hours and multiplying the result by the standard rate.

DATA

Standard hours = 1.50 hours

Standard rate = $12/hour

Actual hours = 1.65 hours

Actual rate = $11.5/hour

Calculation

LABOUR USAGE VARIANCE = (SH-AH)SR

LABOUR USAGE VARIANCE =(1.5 - 1.65) x $12

LABOUR USAGE VARIANCE = (-0.15) x $12

LABOUR USAGE VARIANCE = $1.8 Unfavourable