Lewis Company\'s standard labor cost of producing one unit of Product DD is 3.4

Question

Lewis Company's standard labor cost of producing one unit of Product DD is 3.4 hours at the rate of $13.8 per hour produce 12,600 units of Product DD. . During August, 43,700 hours of labor are incurred at a cost of $14.00 per hour to Compute the total labor variance Total labor variancre Compute the labor price and quantity variances Labor price variance Labor quantity variance Compute the labor price and quantity variances, assuming the standard is 3.8 hours of direct labor at $14.20 per hour Labor price variance

Explanation / Answer

a.       Total labor variance= Actual costs-standard labor costs

                                                   = 43700*$14-(12600*3.4)*$13.8

                                                    = $611800-$591192

                                                    = $20608(unfavorable)

b.      Labor price variance= (Actual labor rate per hour-standard rate per hour)*number of hours worked

                                                   =43700($14-$13.8)

                                                   = $8740(unfavorable)

Labor quantity variance

= (number of hours actually worked- Standard labor allowed)*standard labor rate per hour

= (43700-42840)*13.8

=$11868(unfavorable)

c.       Labor price variance= (standard rate per hour- Actual labor rate per hour)*number of hours worked

                                                   =43700($14.2-$14)

                                                   = $8740(favorable)

Labor quantity variance

= (Standard labor allowed- number of hours actually worked)*standard labor rate per hour

= (47880-43700)*14.2

= $59356(favorable)

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