Scheer Company\'s standard labor cost of producing one unit of Product DD is 4 h

Question

Scheer Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour. During August, 40,800 hours of labor are incurred at a cost of $12.10 per hour to produce 10,000 units of Product DD.




Compute the total labor variance.
$ FavorableUnfavorable






Compute the labor price and quantity variances.
Labor price variance $ UnfavorableFavorable
Labor quantity variance $ UnfavorableFavorable







Repeat the previous question, assuming the standard is 4.2 hours of direct labor at $12.25 per hour.
Labor price variance $ UnfavorableFavorable
Labor quantity variance $ UnfavorableFavorable







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Explanation / Answer

Total Labor Varianve = $13,680 Unfavorable Labor Price Variance = $4080 Unfavorable Labor Quantity Variance = $9600 Unfavorable Working: Labor Price Variance = Actual Hours Worked * (Standard Rate - Actual Rate) = 40800 * (12 - 12.10) = 40800 * -0.1 = $4080 Unfavorable Labor Quantity Variance = (Actual Hours - Standard Hours) * Standard Rate For producing 1 unit 4 standard labor hours required For producing 10000 units (10000 * 4) = 40000 = (40800 - 40000) * 12 = 800 * 12 = $9600 Unfavorable Total Labor Varianve = (Standard Hours * Standard Rate) - (Actual Hours * Actual Rate) = (40000 * 12) - (40800 * 12.1) = 480000 - 493680 = $13,680 Unfavorable Total Labor Varianve = $20,820 Favirabke Labor Price Variance = $6,120 Favorable Labor Quantity Variance = $14,700 Favorable Working: Labor Price Variance = Actual Hours Worked * (Standard Rate - Actual Rate) = 40800 * (12.25 - 12.10) = 40800 * 0.15 = $6,120 Favorable Labor Quantity Variance = (Actual Hours - Standard Hours) * Standard Rate For producing 1 unit 4.2 standard labor hours required For producing 10000 units (10000 * 4.2) = 42000 = (40800 - 42000) * 12.25 = 1200 * 12.25 = $14,700 Favorable Total Labor Varianve = (Standard Hours * Standard Rate) - (Actual Hours * Actual Rate) = (42000 * 12.25) - (40800 * 12.10) = 514500 - 493680 = $20,820 Favirabke Labor Price Variance = Actual Hours Worked * (Standard Rate - Actual Rate) = 40800 * (12.25 - 12.10) = 40800 * 0.15 = $6,120 Favorable Labor Quantity Variance = (Actual Hours - Standard Hours) * Standard Rate For producing 1 unit 4.2 standard labor hours required For producing 10000 units (10000 * 4.2) = 42000 = (40800 - 42000) * 12.25 = 1200 * 12.25 = $14,700 Favorable Total Labor Varianve = (Standard Hours * Standard Rate) - (Actual Hours * Actual Rate) = (42000 * 12.25) - (40800 * 12.10) = 514500 - 493680 = $20,820 Favirabke
Thank you....    Total Labor Varianve = $13,680 Unfavorable Labor Price Variance = $4080 Unfavorable Labor Quantity Variance = $9600 Unfavorable

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