Alexis Company recently completed 12,200 units of its single product, consuming
ID: 2569239 • Letter: A
Question
Alexis Company recently completed 12,200 units of its single product, consuming 37,000 labor hours that cost the firm $621,600. According to manufacturing specifications, each unit should have required 3 hours of labor time at $17.20 per hour.
On the basis of this information, determine Alexis's labor rate variance and labor efficiency variance.
Choice A
Choice B
Choice C
Choice D
Choice E
Rate Efficiency A. $ 14,640 F $ 6,720 F B. $ 14,640 F $ 6,720 U C. $ 14,800 F $ 6,880 F D. $ 14,800 F $ 6,880 U E. $ 14,800 U $ 6,880 UExplanation / Answer
Actual rate per hour = 621,600 / 37,000 = 16.8
Standard rate per hour = 17.2
Actual hours = 37,000
Labour rate variance = Actual hours * (Standard rate per hour - Actual rate per hour)
= 37,000 (17.2 - 16.8)
= 14,800 Favourable
Standard labour hours = 3 * 12,200 = 36,600
Actual labour hours = 37,000
Standard rate per hour = 17.2
Labour efficiency variance = Standard rate per hour * (Standard labour hours - Actual labour hours)
= 17.2 * (36,600 - 37,000)
= 6,880 Unfavourable
The answer is D.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.