Asked by Sydney Henke on Jun 16, 2024
Verified
The standards for product G78V specify 5.5 direct labor-hours per unit at $13.50 per direct labor-hour. Last month 1,740 units of product G78V were produced using 9,600 direct labor-hours at a total direct labor wage cost of $122,220.Required:a. What was the labor rate variance for the month?b. What was the labor efficiency variance for the month?
Labor Rate Variance
The difference between the actual cost of labor and the budgeted cost, indicating how well a company has controlled its labor costs.
Labor Efficiency Variance
The difference between the actual hours worked by employees to produce goods and the expected hours, used to measure workforce efficiency.
- Ascertain and clarify differences in direct labor rate and efficiency metrics.
Verified Answer
NS
nikunj singlaJun 19, 2024
Final Answer :
a. Labor rate variance = (Actual hours × Actual rate) − (Actual hours × Standard rate)= ${{[a(5)]:#,###}} − ({{[a(4)]:#,###}} hours × ${{[a(2)]:#,###.00}} per hour)= ${{[a(5)]:#,###}} − ${{[a(6)]:#,###}}= ${{[a(7)]:#,###}} Favorableb. Standard hours = Standard hours per unit × Actual output = {{[a(1)]:#,###.0}} hours per unit × {{[a(3)]:#,###}} units = {{[a(8)]:#,###}} hoursLabor efficiency variance = (Actual hours − Standard hours) × Standard rate= ({{[a(4)]:#,###}} hours − {{[a(8)]:#,###}} hours) × ${{[a(2)]:#,###.00}} per hour= {{[a(9)]:#,###}} hours × ${{[a(2)]:#,###.00}} per hour= ${{[a(10)]:#,###}} Unfavorable
Learning Objectives
- Ascertain and clarify differences in direct labor rate and efficiency metrics.
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