9. (2 points) Cyric Company\'s labor standard for one unit of a given product is
ID: 2514252 • Letter: 9
Question
9. (2 points) Cyric Company's labor standard for one unit of a given product is 12 hours, and the standard rate for one hour of labor is $70. The company actually made 300 units of the product, and used 3,200 hours of labor, and incurred $256,000 labor cost. What is the amount of the labor rate variance? Also, indicate whether it is favorable or unfavorable.-> Favorable or Unfavorable (choose one) and (2 points) The Wright Company has a standard costing system. The following data area 10. Actual quantity of direct material Actual quantity of direct material purchased and used Standard price of direct material Total material variance Material quantity variance 25,000 pounds S2 per pound $7,000, favorable $9,500, unfavorable The actual price per pound of the direct material purchased in September is: $Explanation / Answer
1. Please note that labor rate variance is calculated by multiplying the actual labour hours paid with the difference of Actual Rate per labor hour and standard labour rate rate.
Labor rate variance= (Actual rate- Standard rate)*Actual labor hours paid
Acutal labor hour rate can be computed by dividing the total payment($256,000) by the number of hours paid(3200). Actual labor rate per hour is 256,000/3200= $80 per hour.
Labor rate variance= (80-70)*3200 = 32000
Since the actual rate is hougher than the standard rate, we can say the variance of $32,000 is Unfavourable.
Solution-2: Total Material variance is $ 7,000 favorable. Please note that
Material variance= Material rate variance + Material Quantity variance
+7000= Material rate variance+ (-9500)
Material rate variance= 7000+9500= 16,500 favorable.
Material Rate Variance is computed by formulae as : (Standrad rate-Actual rate)*Actual Material purchased
16500= (2-Actual rate)*25000
Actual rate= 2-0.66= $1.34
So,the actual rate is $1.34 which is less than standard rate of $2.
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