Do It! Review 23-3 The standard cost of product 5252 includes 1.90 hours of dire
ID: 2589176 • Letter: D
Question
Do It! Review 23-3 The standard cost of product 5252 includes 1.90 hours of direct labor at $15.70 per hour. The predetermined overhead rate is $22.00 per direct labor hour. During July, the company incurred 4,000 hours of direct labor at an average rate of $16.00 per hour and $81,500 of manufacturing overhead costs. It produced 2,000 units. Compute the total, price, and quantity variances for labor.
Total labor variance $
Labor price variance $
Labor quantity variance $
(b) Compute the total overhead variance:
Explanation / Answer
Labour price variance = (std. rate - actual rate ) * actual hours
= ( 15.7 - 16) * 4000
= 64000 - 62800
= $1,200 Unfavourable
Labour quantity variance = (std. hours - Actual hours) * standard rate
= (5252*1.9 - 4000) * 15.7
= -200*15.7
= $(3,140) unfavourable
Total labour variance = (Std rate * std hour) - (actual rate * actual hour)
= (15.7*3800) - (16*4000)
= $4,340 unfavourable
b) Total overhead variance = overhead applied - actual overhead
= (22*3800) - 81500
= $2,100 favourable
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