Question

In: Accounting

Klein Luxury Inn budgeted 600 hours for room attendants to clean rooms. The budgeted wage rate...

Klein Luxury Inn budgeted 600 hours for room attendants to clean rooms. The budgeted wage rate for room attendants is $3.40 per hour. The allowable time for actual output for restaurant staff to perform actual work is calculated as 629.00 hours. The room attendants actually worked 660 hours and the wages paid to room attendants totaled $2,178. Based on the information, run a complete variance analysis for variable labor by indicating variance conditions for each of the variable labor variance components.

Expert Solution

All the Variable Labor Variances are calculated and summarised below, with calculations

Actual Cost

Standard Cost

AH

x

AR

AH

x

SR

SH allowed

x

SR

660

x

$ 3.30

660

x

$ 3.40

629

x

$ 3.40

$ 2,178.00

$ 2,244.00

$ 2,138.60

Rate Variance - Labor

$ 66.00

Efficency Variance - Labor

$ 105.40

Labor Rate Variance

$ 66.00

Favourable

Labor Efficiency Variance

$ 105.40

Unfavourable

Total Labor Cost (Spending) Variance)

$ 39.40

Unfavourable

Note:

>

Labor Price Variance is favourable because Actual rate (AR) is LESS than Standard Rate (SR)

>

Labor quantity or Efficiency Variance is unfavourable because Actual Hrs (AH) is MORE than Standard Hrs (SH)

AH/AR = Actual hours/Actual rate

SH/SR = Standard hours allowed / Standard rate

ekkarill92 answered 2 years ago

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