Chapter 21 After evaluating Null Company\'s manufacturing process, management de

Question

Chapter 21 After evaluating Null Company's manufacturing process, management decides to establish standards of 3 hours of direct labor per unit of product and $15 per hour for the labor rate. During October, the company uses 16,250 hours of direct labor at a $247,000 total cost to produce 5,600 units of product. In November, the company uses 22,000 hours of direct labor at a $335,500 total cost to produce 6,000 units of product 4.34 points AH Actual Hours SH Standard Hours SR Standard Rate (1) Compute the direct labor rate variance, the direct labor efficlency variance, and the total direct labor cost varlance for each of these two months. Classify each variance as favorable or unfavorable. Cost 22 of 28

Explanation / Answer

october Actual cost Standard cost AH * AR AH * SR SH * SR 16200 * 15.2 16200 * 15 16800 * 15 246240 243000 252000 3240 9,000 Direct labor rate variance 3,240 U direct labor efficiecny variance 9,000 F total direct labor variance 5760 F november Actual cost Standard cost AH * AR AH * SR SH * SR 22,000 * 15.25 22000 * 15 18000 * 15 335500 330000 270000 5500 60000 Direct labor rate variance 5,500 U direct labor efficiecny variance 60,000 U total direct labor variance 65500 U

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