Paradise Corp. has determined a standard labor cost per unit of $8.00 (1 hour ×

Question

Paradise Corp. has determined a standard labor cost per unit of $8.00 (1 hour × $8.00 per hour). Last month, Paradise incurred 1,200 direct labor hours for which it paid $9,000. The company also produced and sold 1,250 units during the month.

Calculate the direct labor rate, efficiency, and spending variances. (Round your intermediate calculations to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

Direct labor rate

Direct Labor efficiency variance

Total Direct labor spending variance

Explanation / Answer

Paradise Copr. Standard labour cost per unit 8 $ Direct labour hours incurred 1200 Hours Direct labour cost 9000 $ No. of units sold during the month 1250 Direct labour Rate 7.5 $ (Direct labour cost/ Direct labour hours) Direct Labour Efficiency Variance (Actual Hours X Standard Rate - Standard Hour X Standard Rate) Actual Hours 1200 Standard Hours 1250 Standard rate 8 Direct labour Efficiency Variance -400 F (1200 X 8 - 1250 X 8) Total Direct labour spending variance Actual Cost incurred 9000 $ Budgeted Cost 10000 $ Total Direct labour spending variance -1000 F

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