Asked by Charlie Giles on Jul 29, 2024
Verified
In a certain standard costing system the following results occurred last period: labour rate variance, $1,000 U; labour efficiency variance, $2,800 F; and the actual labour rate was $0.20 more per hour than the standard labour rate. The number of actual direct labour hours used last period was:
A) 4,800.
B) 5,400.
C) 5,000.
D) 9,000.
Labour Rate Variance
A financial metric that measures the difference between the actual cost of labor and the expected (or standard) cost.
Labour Efficiency Variance
Labour efficiency variance is the difference between the actual hours worked and the standard hours expected, multiplied by the standard labor rate, used to assess workforce performance.
Standard Labour Rate
A predetermined rate of pay established for work performed, used in budgeting and costing calculations.
- Calculate the divergences in costs for materials, labor, and variable overhead, with regards to price, quantity, efficiency, and budgetary distinctions.
- Make distinctions between beneficial and unfavorable budget variances and their roles in financial management and cost limitation.
Verified Answer
ZK
Zybrea KnightAug 03, 2024
Final Answer :
C
Explanation :
The actual labour rate was $8.20 ($8 standard + $0.20). The labour rate variance is calculated as (Actual Rate - Standard Rate) * Actual Hours. Given a $1,000 unfavorable variance, we solve for Actual Hours: $1,000 = $0.20 * Actual Hours, so Actual Hours = $1,000 / $0.20 = 5,000 hours.
Learning Objectives
- Calculate the divergences in costs for materials, labor, and variable overhead, with regards to price, quantity, efficiency, and budgetary distinctions.
- Make distinctions between beneficial and unfavorable budget variances and their roles in financial management and cost limitation.