Asked by Saeed Afzal on May 18, 2024
Verified
The following labor standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
Required:a. What is the labor rate variance for the month?b. What is the labor efficiency variance for the month?
Labor Rate Variance
The difference between the actual wage rate paid to workers and the expected or standard wage rate, multiplied by the actual hours worked.
Labor Efficiency Variance
The difference between the actual hours worked and the standard hours expected to produce a certain level of output, multiplied by the standard labor rate.
- Compute and elucidate direct labor rate and efficiency discrepancies.
Verified Answer
MT
Monica ToscanoMay 18, 2024
Final Answer :
a. Labor rate variance = (Actual hours × Actual rate) − (Actual hours × Standard rate)= ${{[v(4)]:#,###}} − ({{[v(3)]:#,###}} hours × ${{[v(2)]:#,###.00}} per hour)= ${{[v(4)]:#,###}} − ${{[v(11)]:#,###}}= ${{[v(6)]:#,###}} Unfavorableb. Standard hours = Standard hours per unit × Actual output= {{[v(1)]:#,###.0}} hours per unit × {{[v(5)]:#,###}} units= {{[v(8)]:#,###}} hoursLabor efficiency variance = (Actual hours − Standard hours) × Standard rate= ({{[v(3)]:#,###}} hours − {{[v(8)]:#,###}} hours) × ${{[v(2)]:#,###.00}} per hour= {{[v(12)]:#,###}} hours × ${{[v(2)]:#,###.00}} per hour= ${{[v(9)]:#,###}} Unfavorable
Learning Objectives
- Compute and elucidate direct labor rate and efficiency discrepancies.
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