Question

In: Accounting

Lewis Company’s standard labor cost of producing one unit of Product DD is 3.10 hours at...


Lewis Company’s standard labor cost of producing one unit of Product DD is 3.10 hours at the rate of $12.70 per hour. During August, 42,200 hours of labor are incurred at a cost of $12.80 per hour to produce 13,500 units of Product DD.

(a)

Compute the total labor variance.

Total labor variance $enter the Total labor variance in dollars   select an option                                                          FavorableNeither favorable nor unfavorableUnfavorable


Compute the labor price and quantity variances.

Labor price variance $enter a dollar amount select an option                                                          UnfavorableNeither favorable nor unfavorableFavorable
Labor quantity variance $enter a dollar amount select an option                                                          UnfavorableFavorableNeither favorable nor unfavorable

Compute the labor price and quantity variances, assuming the standard is 3.40 hours of direct labor at $12.95 per hour.

Labor price variance $enter a dollar amount select an option                                                          FavorableUnfavorableNeither favorable nor unfavorable
Labor quantity variance $enter a dollar amount select an option                                                          Neither favorable nor unfavorableUnfavorableFavorable

Solutions

Expert Solution

A)

Number of hours * Rate per Hour = Total cost
Actual 42200 12.8 540160
Standard cost 13500*3.1=41850 12.7 531495

Total Labor variance = Actual cost-standard cost

                = 540160 -531495

                = $ 8665 U

2)

Labor price variance = AH[AR-SR]

                 = 42200 [12.8 -12.7]

                = 42200 * .1

               = 4220 U

Labor quantity variance =SR[AH-SH]

                    = 12.7 [42200 - 41850 ]

                    = 12.7 * 350

                   = 4445 U

3)

Total standard hours = 13500*3.40=45900 Hours

Labor price variance = AH[AR-SR]

                 = 42200 [12.8 -12.95]

                = 42200 * - .15

               = -6330 F   (Enter as 6330 F if needs to be enter as positive value)

Labor quantity variance =SR[AH-SH]

                    = 12.95 [42200-45900]

                   = 12.95 * - 3700

                   = - 47915 (Enter as 47915 F if needs to be enter as positive value)


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