Question

Information regarding Maxwell’s direct labor cost for the month of January follows: Direct labor hourly rate paid $ 29.20 Total standard direct labor hours for units produced this period 11,700 Direct labor hours actually worked 11,500 Direct labor rate variance $ 16,700 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

Answer 1

Answer:

1. std rate  $30.64
2. efficiency variance  $6,128.00

Explanation:

We will work the rate variance to obtain the standard rate:

$(standard\:rate-actual\:rate) \times actual \: hours DL \: rate \: variance$

actual rate  $29.20

actual hours 11,700

difference  $1.44

rate variance  $16,800.00

$(standard\:rate-29.2) \times 11,700 = 16,700$

$(standard\:rate= 16,700 \div 11,700 +29.2$

std rate  $30.64

Now we can solve for the labor efficiency variance:

$(standard\:hours-actual\:hours) \times standard \: rate = DL \: efficiency \: variance$

std  hours 11700

actual hours 11500

std rate  $30.64

difference 200

efficiency variance  $6,128.00

The diference is positive, sothe variance is favorable.