Question

The following labor standards have been established... The following labor standards have been established for a particular product: Standard labor hours per unit of output 4.4 hours Standard labor rate $ 16.70 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 5,200 hours Actual total labor cost $ 87,360 Actual output 1,100 units
Required:
a. What is the labor rate variance for the month?
b. What is the labor efficiency variance for the month? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Answer 1

Answer:

Results are below.

Explanation:

Giving the following information:

Standard labor hours per unit of output 4.4 hours

Standard labor rate $ 16.70 per hour

Actual hours worked 5,200 hours

Actual total labor cost $ 87,360

Actual output 1,100 units

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

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

Direct labor rate variance= (16.7 - 16.8)*5,200

Direct labor rate variance= $520 unfavorable

Actual rate= 87,360/5,200= $16.8

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

Direct labor time (efficiency) variance= (1,100*4.4 - 5,200)*16.7

Direct labor time (efficiency) variance= $6,012 unfavorable