Question

Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0 Ibs. @ $5.00 per Ib.) $ 20.00 Direct labor (1.9 hrs. @ $12.00 per hr.) 22.80 Overhead (1.9 hrs. @ $18.50 per hr.) 35.15 Total standard cost $ 77.95 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials $ 15,000 Indirect labor 75,000 Power 15,000 Repairs and maintenance 30,000 Total variable overhead costs $ 135,000 Fixed overhead costs Depreciation—Building 25,000 Depreciation—Machinery 71,000 Taxes and insurance 17,000 Supervision 279,250 Total fixed overhead costs 392,250 Total overhead costs $ 527,250 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,500 Ibs. @ $5.10 per lb.) $ 313,650 Direct labor (23,000 hrs. @ $12.30 per hr.) 282,900 Overhead costs Indirect materials $ 41,000 Indirect labor 176,800 Power 17,250 Repairs and maintenance 34,500 Depreciation—Building 25,000 Depreciation—Machinery 95,850 Taxes and insurance 15,300 Supervision 279,250 684,950 Total costs $ 1,281,500 rev: 03_28_2018_QC_CS-122864 4. Compute the direct labor cost variance, including its rate and efficiency variances. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate

Answer 1

• Question only asks for Laborl Variances [at the bottom]
• Actual data for Labor

Actual DATA for		15000	units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct labor	23000	$              12.30	$        282,900.00

• Standard data for Materials

Standard DATA for		15000	units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct labor	( 1.9hr x 15000 units)=28500hr	$                12.00	$     342,000.00

• All Labor Variances

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                     12.00	-	$                    12.30	)	x	23000
	-6900
	Variance		$              6,900.00			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	28500	-	23000	)	x	$                        12.00
	66000
	Variance		$            66,000.00			Favourable-F
Labor COST Variance
(	Standard Cost	-	Actual Cost	)
(	$           342,000.00	-	$          282,900.00	)
	59100
	Variance		$            59,100.00			Favourable-F