Kendra\'s company\'s standard labor cost of producing one unit of Product DD is
ID: 2351994 • Letter: K
Question
Kendra's company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.72 per hour During August 40,800 hours of labor are incurred at a cost of $12.83 per hour to produce 10,000 units of product DD.
Compute the total labor variance
favorable or unfavorable
compute the labor and quantity variances
labor price variance favorable or unfavorable
labor quanity variance favorable or unfavorable
Repeat the previous question assuming the standard is 4.2 hours of direct labor at 12.99 per hour.
labor price variance favorable or unfavorable
labor quantity variance favorable or unfavorable
Explanation / Answer
Standard Rate = 12.72
Actual Rate = 12.83
Standard Hours = 4 * 10,000 = 40,000
Actual Hours = 40,800
price variance = actual hours(actual rate - standard rate)
price variance = 40,800(12.83-12.72) = 4488
Quantity variance = standard rate(acutal hours - standard hours)
quantity variance = 12.72(40,800 - 40,000) = 10176
Total variance = 4488 + 10176 = 14664
Answer:
Total labor variance = $14664 Unfavorable
Labor price variane = $4488 Unfavorable
Labor quantity variance = $10176 Unfavorable
Second question:
Standard rate = 12.99
Actual rate = 12.83
Standard hours = 4.2*10,000 = 42,000
Actual hours 40,800
Price variance = actual hours(actual rate - standard rate)
Price variance = 40,800(12.83 - 12.99) = -6528
Quantity variance = standard rate(actual hours - standard hours)
Quantity varince = 12.99(40,800 - 42,000) = -15588
Total variance = -6528 + -15588 = -22116
Answer:
Total Labor variance = $22116 Favorable
Labor Price variance = $6528 Favorable
Labor Quantity variance = $15588 Favorable
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