Question

The direct labor standards for a particular product are 4 hours of direct labor at $12.00 per direct labor-hour = $48.00. During October, 3,350 units of this product were made, which was 150 units less than budgeted. The labor cost incurred was $159,786 and 13,450 direct labor-hours were worked. The direct labor variances for the month were:

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

The direct labor standards for a particular product are 4 hours of direct labor at $12.00 per direct labor-hour

Actual:

3,350 units of this product were made

The labor cost incurred was $159,786 and 13,450 direct labor-hours were worked.

To calculate the direct labor efficiency and rate variance, we need to use the following formulas:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Standard quantity= 4*3,350= 13,400

Direct labor time (efficiency) variance= (13,400 - 13,450)*12

Direct labor time (efficiency) variance= $600 unfavorable

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Actual rate= 159,786/13,450= $11.88

Direct labor rate variance= (12 - 11.88)*13,450

Direct labor rate variance= $1,614 favorable