Asked by Harry Singh on May 13, 2024
Verified
The standards for product G78V specify 4.1 direct labor-hours per unit at $12.10 per direct labor-hour.Last month 1,600 units of product G78V were produced using 6,600 direct labor-hours at a total direct labor wage cost of $77,220.
Required:
a.What was the labor rate variance for the month?
b.What was the labor efficiency variance for the month?
Direct Labor-hours
Represents the total hours worked directly on the production of goods, important for calculating the labor cost per unit.
Labor Rate Variance
The difference between the actual cost of labor and the standard or expected cost, often analyzed in cost accounting.
Labor Efficiency Variance
Labor Efficiency Variance measures the difference between the actual hours worked and the standard hours expected for the work performed.
- Compute variances in labor rates and efficiency in labor.
Verified Answer
= $77,220 − (6,600 hours × $12.10 per hour)
= $77,220 − $79,860
= $2,640 F
b.SH = Standard hours per unit × Actual output = 4.1 hours per unit × 1,600 units= 6,560 hours
Labor efficiency variance = (AH − SH)× SR
= (6,600 hours − 6,560 hours)× $12.10 per hour
= 40 hours × $12.10 per hour
= $484 U
Learning Objectives
- Compute variances in labor rates and efficiency in labor.
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