Question

During January, Ajax Co. incurs 1,850 hours of direct labor at an hourly cost of S11 output is t 100 units of its finished product. Ajax standard labor cost per unitor (2 hours x $11.00). Instructions
Compute the total, price, and quantity labor variances for Ajax Co. for January.

Answer 1

Answer and Explanation:

The computation is shown below:

For the labor price variance

= Actual Hours × (Actual rate - standard rate)  

= 1,850 × ($11.80 per hour - $11 per hour)  ,

= 1.850 × $0.80 per hour

= $1,480 unfavorable

For labor quantity variance

= Standard Rate × (Actual hours - Standard hours)  

= $11 × (1,850 hours - 2,000 hours)  

= $11 per hour × - 150hours

= $1,650 favorable

Now total would be

= Labor price variance + labor quantity variance

= $1,480 unfavorable + 1,650 favorable

= $170 favorable