Hanson Inc. has the following direct labor standard to manufacture one Zippy 1.5
ID: 2397372 • Letter: H
Question
Hanson Inc. has the following direct labor standard to manufacture one Zippy 1.5 standard hours per Zippy at $12.00 per direct labor hour Last week, 1,550 direct labor hours were worked at a total labor cost of $18,910 to make 1,000 Zi ppies Hanson's labor rate variance (LRV) for the week was: a. $310 unfavorable b. $310 favorable c. $300 unfavorable d. $300 favorable Hanson's labor efficiency variance (LEV) for the week was: a. $590 unfavorable. b. $590 favorable. c. $600 unfavorable. d. $600 favorableExplanation / Answer
Answers
Actual DATA for
1000
units
Quantity (AQ)
Rate (AR)
Actual Cost
Direct labor
1550
$ 12.20
$ 18,910.00
Standard DATA for
1000
units
Quantity (SQ)
Rate (SR)
Standard Cost
Direct labor
1500 [1.5 hrs x 1000 units]
$ 12.00
$ 18,000.00
Labor Rate Variance
(
Standard Rate
-
Actual Rate
)
x
Actual Labor Hours
(
$ 12.00
-
$ 12.20
)
x
1550
-310
Variance
$ 310.00
Unfavourable-U
Correct Answer: Option ‘a’ $ 310 Unfavourable
Labour Efficiency Variance
(
Standard Hours
-
Actual Hours
)
x
Standard Rate
(
1500
-
1550
)
x
$ 12.00
-600
Variance
$ 600.00
Unfavourable-U
Correct Answer: Option ‘c’: $ 600 Unfavourable
Actual DATA for
1000
units
Quantity (AQ)
Rate (AR)
Actual Cost
Direct labor
1550
$ 12.20
$ 18,910.00
Standard DATA for
1000
units
Quantity (SQ)
Rate (SR)
Standard Cost
Direct labor
1500 [1.5 hrs x 1000 units]
$ 12.00
$ 18,000.00
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