Question

Mordica Company’s standard labor cost per unit of output is $21.80 (2.00 hours x $10.90 per hour). During August, the company incurs 2,233 hours of direct labor at an hourly cost of $11.34 per hour in making 1,100 units of finished product.

Compute the total, price, and quantity labor variances. (Round answers to 2 decimal places, e.g. 52.75.)

Total labor variance
$
[Entry field with incorrect answer]
[Entry field with correct answer]

Unfavorable
Favorable
Neither favorable nor unfavorable
Labor price variance
$
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[Entry field with correct answer]

Unfavorable
Favorable
Neither favorable nor unfavorable
Labor quantity variance
$
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[Entry field with correct answer]

Neither favorable nor unfavorable
Favorable
Unfavorable

Answer 1

• Working forms part of the answer
• Requirement 1

Total Labor Variance
(	Standard Cost [1100 units x 21.80]	-	Actual Cost = 2233 x 11.34]	)
(	$             23,980.00	-	$            25,322.22	)
	-1342.22
	Variance		$              1,342.22			Unfavourable-U

Total Labor Variance = $ 1342.22 Unfavourable

• Requirement 2

Labor Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                     10.90	-	$                    11.34	)	x	2233
	-982.52
	Variance		$                  982.52			Unfavourable-U

Labor price Variance = $ 982.52 Unfavourable

• Requirement 3

Labour Quantity Variance
(	Standard Hours [1100 units x 2]	-	Actual Hours	)	x	Standard Rate
(	2200	-	2233	)	x	$                        10.90
	-359.7
	Variance		$                  359.70			Unfavourable-U

Labor Quantity Variance = $ 359.70 Unfavourable