Question
In: Accounting
Delmar Inc. uses a standard cost system. Labor standards are 2.1 hours per widget at $9.20...
Delmar Inc. uses a standard cost system. Labor standards are 2.1
hours per widget at $9.20 per hour. During August, Delmar Inc. paid
its workers $153,820 for 16,500 hours. Delmar Inc. produced 8,500
widgets during August.
a. Calculate the direct labor rate variance.
(Do not round your intermediate calculations. Indicate the
effect of variance by selecting "Favorable", "Unfavorable", or
"None" for no effect (i.e., zero variance).)
b. Calculate the direct labor efficiency variance.
(Indicate the effect of variance by selecting "Favorable",
"Unfavorable", or "None" for no effect (i.e., zero
variance).)
Solutions
Expert Solution
Answer:-
Actual rate per hour = $153820/16500 hours = $9.32 per hour
a)-Labor Rate variance = (Standard rate – Actual rate) * Actual payment hour
= ($9.20 per hour - $9.32 per hour)*16500 hours
= $1980 Unfavourable
b)-Labor Efficiency variance = (Standard hours- Actual hours)*Standard rate per hour
=(17850 hours – 16500 hours)*$9.20 per hour
= $12420 Favourable
Where:-
Standard hours = Standard hours per unit*Actual units
=2.1 standard hours per unit*8500 units
= 17850 hours
ekkarill92 answered 2 years agoRelated Solutions
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