The records of Norton, Inc. show the following for July: Standard labor-hours al

Question

The records of Norton, Inc. show the following for July: Standard labor-hours allowed per unit of output 1.3 Standard variable overhead rate per standard direct labor-hour $ 28 Good units produced 60,000 Actual direct labor-hours worked 80,000 Actual total direct labor $ 1,617,000 Direct labor efficiency variance $ 38,000 U Actual variable overhead $ 2,037,000

Required:

Compute the direct labor and variable overhead price and efficiency variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Direct labor:

Price variance:?

Efficiency variance:?

Variable overhead:

Price variance:?

Efficiency variance:?

Explanation / Answer

Direct labour efficiency variance = (Standard hour-actual hour)Standard rate

-38000 = (60000*1.3-80000)*X

-38000 = 78000X-80000X

-38000 = -2000X

X(standard rate) = 19 per hour

Direct labour efficiency varianc e= 19 per hour

Direct labour price variance = (19*80000-1617000) = 97000 U

Variabel overhead price variance = (28*80000-2037000) = 203000 F

Variable overhead efficiency variance = (60000*1.3-80000)*28 = 56000 U

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