Problem 3 (10 The following labor 3 (1 o pointsta ndards have been established f

Question

Problem 3 (10 The following labor 3 (1 o pointsta ndards have been established for a particular product Standard hours per unit of output 3.2 hours 519.10 per hour labor rate following data pertains to operations concerning the product for last month: The Actual hours worked 5,500 hours $105,050 total labor cost Actual output 1,900 units Required: What is the labor rate variance for the month? Favorable or unfavorable? SHOW YOUR WORK. (5 points) b whatisthe labor efliciency variance for the month? Favorable or unftavorable? SHOW YOUR WORK. (5 points) AQ x AP AQ x SP SQ x SP Rate Variance Efficiency Variance

Explanation / Answer

1.Labour rate variance

=AH*(SR-AR)

=5500*($19.1-$105,050/5500)

= 5500*(0)

= 0

2.Labour efficiency variance

(SH-AH)*SR=(1900*3.2-5500)*$19.1

=( 6080-5500)*$19.1  

= $11,078 F

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