Use the following information to determine the variances listed below: Direct Ma

Question

Use the following information to determine the variances listed below:

Direct Materials                                            Direct Labor

Actual price of DM $127                                Actual rate of DL $12.85

Standard price of DM $120                            Standard rate of DL $13.00

Actual quantity of DM 1,125 units                 Actual quantity of DL 19,000 hours

Standard quantity of DM 1,100 units             Standard quantity of DL 17,000 hours

Compute the price, quantity, and total labor variances and determine if each variance is favorable or unfavorable.

1)Direct Labor Price Variance

2)Direct Labor Efficiency (quantity) Variance

3)Direct Labor Total Variance

Explanation / Answer

Direct labour price variance = (13-12.85)*19000 = 2850 Favorable

Direct labour efficiency variance = (17000-19000)*13 = 26000 Unfavorable

Direct labour total variance = (17000*13)-(19000*12.85) = 23150 Unfavorable

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