Direct Labor Variances Using the following information about standard costs and

Question

Direct Labor Variances

Using the following information about standard costs and the actual cost and usage data, compute the direct labor rate and direct labor efficiency variances.

Direct Labor Variances

Using the following information about standard costs and the actual cost and usage data, compute the direct labor rate and direct labor efficiency variances.

Direct materials quantity standard 1 pound per unit Direct materials price standard $10.00 per pound Direct labor time standard 0.5 hour per unit Direct labor rate standard $12.00 per hour Variable overhead rate standard $6.00 per machine hour Fixed overhead rate standard $11.00 per machine hour Machine hour standard 4 hours per unit Direct labor hours used 11,000 Total cost of direct labor $134,200 Number of good units produced 21,000 units Direct labor rate variance______$ Select FavorableUnfavorableNo effect Direct labor efficiency variance______$ Select FavorableUnfavorableNo effect

Explanation / Answer

Direct rate variance = [AH *AR] - [AH *SR]

                             = 134200 - [11000 * 12]

                             = 134200 - 132000

                             = 2200 U

Labor efficiency variance = SR (AH -SH)

            12 [11000 - ( 21000 * .5)]

             12 [11000 - 10500]

              12 * 500

                  6000 U

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