The standard direct labor cost to produce 1 pound of output for Noth Company is

ID: 2582257 • Letter: T

Question

The standard direct labor cost to produce 1 pound of output for Noth Company is presented

below. Related data regarding the planned and actual production activities for the current month

for the company are also given below. (DLH = Direct Labor Hours)

Direct Labor Standard: .4 DLH @ $12.00 per DLH

Planned production

15,000 pounds

Actual production

15,500 pounds

Actual direct labor costs (6,250 DLH)

$75,250

Noth Company’s direct labor rate variance for the current month would be __________?

19) Noth Company’s direct labor efficiency variance for the current month would be

__________?

Direct labor rate variance = Actual quantity * actual rate - Actual quantity * standard rate

= 6250 hours * $12.04 - 6250 hours * $12

= $75250 - $75000

= $250 favourable.

Direct labor efficiency variance = (Actual hours * standard rate) - (Standard hours * standard rate)

= 6250 hours * $12 - 3750 hours * $12

= $75000 - $45000

= $30000 unfavourable.

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