For the stamping department of a manufacturing firm, the standard cost for direc

Question

For the stamping department of a manufacturing firm, the standard cost for direct labor is $12 per hour, and the production standard calls for 1,000 stampings per hour. During June, 168 hours were required for actual production of 148,000 stampings. Actual direct labor cost for the stamping department for June was $2,184. Calculate the direct labor efficiency and rate variances for June. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.) Direct labor efficiency variance $ Direct labor rate variance $

Explanation / Answer

For the stamping department of a manufacturing firm, the standard cost for direct labor is $12 per hour, and the production standard calls for 1,000 stampings per hour. During June, 168 hours were required for actual production of 148,000 stampings. Actual direct labor cost for the stamping department for June was $2,184. Calculate the direct labor efficiency and rate variances for June. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.) Direct labor efficiency variance $ Direct labor rate variance $

(a) Flexed Budget $1,776

a Actual $2,184

Variance $408 U (148,000 stampings / 1,000 stampings per hour) * $12 per hour = $1,776 flexible budget.

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b. Direct labor efficiency variance: (Standard hours - Actual hours) * Standard rate ((148,000 stampings / 1,000 stampings per hour) - 168 hours) * $12 = $240 U

Direct labor rate variance: (Standard rate - Actual rate) * Actual hours ($12 - $13 b) * 168 hours = $168 U

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(b) Actual rate: $2,184 / 168 hours = $13

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