Question

The direct labor standards for a particular product are 4 hours of direct labor at $12.00 per direct labor-hour $48.00. During October, 3,350 units of this product were made, which was 150 units less than budgeted. The labor cost incurred was $159,786 and 13,450 direct labor- hours were worked. The direct labor variances for the month were: Col1 A) B) C) D)Col2 Labor Rate Variance $ 1,614U 1,614U $ 1,614F S 1,614F Col3 Labor Efficiency Variance S 600U $ 600F S 600U S 600F A) Choice A B) Choice B C) Choice C D) Choice ID

Answer 1

Answer:

$1,614 favorable ; $600 unfavorable

Explanation:

The computations are shown below:

Direct Labor Rate Variance  

= Direct labor cost incurred - Direct labor hours worked × Standard rate

= $159,786 - 13,450 hours × $12

= $159,786 - $161,400

= $1,614 favorable

Direct Labor Efficiency Variance  

= (Standard Hours allowed - Actual hours) × Standard rate

= (3,350 units × 4 hour - 13,450 hours) × $12

= (13,400 hours - 13,450 hours) × $12

= $600 unfavorable