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M Chapter 16-Homework (19, 2 C | ezto.mheducation.com/hm.tpx Bookmarks ::: Apps a Amazon.com: Online Iill Lending Club Login.. | PSEcu-one of the.. E Exercise 16-29 Variable Cost Variances (LO 16-5) The following data refleat the current month's activity for Sils, Inc.: $165,120 12,000 13,500 Actual total direct labor Actual hours worked Standard labor hours allowed for actual output (flexible budget) Direct labor price variance Actual variable overhead Standard variable overhead rate per standard direct labor-hour S 4,320 U $ 42,000 3.60 Variable overhead is applied based on standard direct labor-hours allowed. Required: Compute the labor and variable overhead price and efficiency variances. (Indicate the offect of variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no offect (i.e., a variance). Do not round intermediate calculations.) Direct labor Price variance Efficiency variance 4,320U Variable overhead Price variance Efficiency variance

Explanation / Answer

Answer

Direct Labour Price variance = $4,320 U (already given in question)

Direct Labour Efficiency variance =

(Standard Labour Hour for actual output - Actual hour worked ) * standard rate per hour

Standard rate per hour = [Actual total direct labor - Direct labor price variance (U) ] / Actual hours worked

= ($165,120 - $4,320) / 12,000 = $13.40 per hour

Direct Labour Efficiency variance = (13,500 - 12,000) *  $13.40 = $20,100 F

Variable overhead price variance =

( Standard variable overhead rate per standard direct labor-hour * Actual hours worked ) - Actual variable overhead

($3.60 * 12,000 hours) - $42,000 = $1,200 F

Variable efficiency variance =

(Standard labor-hours allowed for actual output - Actual hours worked ) * Standard variable overhead rate per standard direct labor-hour.

(13,500 - 12,000) *  $3.60 = $5,400 F

Final Answer

Direct Labor price variance $4,320 U Direct Labor efficiency variance $20,100 F Variable overhead price variance $1,200 F Variable efficiency variance $5,400 F

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