Answer:
Instructions are below.
Explanation:
Giving the following information:
Labor standards are 2.0 hours per widget at $8.80 per hour.
During August, Delmar Inc. paid its workers $147,250 for 16,500 hours.
Delmar Inc. produced 8,600 widgets during August
<u>To calculate the direct labor rate and efficiency variance, we need to use the following formulas:</u>
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (8,600*2 - 16,500)*8.8
Direct labor time (efficiency) variance= (17,200 - 16,500)*8.8
Direct labor time (efficiency) variance= $6,160 favorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= 147,250/16,500= $8.92
Direct labor rate variance= (8.8 - 8.92)16,500
Direct labor rate variance= $1,980 unfavorable
