Japan Company produces lamps that require 3 standard hours per unit at an hourly
ID: 2430641 • Letter: J
Question
Japan Company produces lamps that require 3 standard hours per unit at an hourly rate of $16.50 per hour. Production of 3,700 units required 11,430 hours at an hourly rate of $17.00 per hour. Enter favorable variances as negative numbers.
(a) Determine the direct labor rate variance.
$(Favorable/Unfavorable)
(b) Determine the direct labor time variance.
$(F/U)
(c) Determine the cost variance.
$(F/U)
(a) Determine the direct labor rate variance.
$(Favorable/Unfavorable)
(b) Determine the direct labor time variance.
$(F/U)
(c) Determine the cost variance.
$(F/U)
Explanation / Answer
a)Labor rate variance = AH[AR-SR]
= 11430 [17-16.5]
= 5715 U
b)labor time variance = SR[AH-SH]
= 16.5[11430-(3700*3)]
= 16.5[11430-11100]
= 5445 U
C)cost variance =rate variance + time variance
= 5715 +5445
= 11160 U
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