Question

Use the following data to find the direct labor rate variance if the company produced 6,400 units of product during the period.

Standard:
Direct labor (3.3 hrs. per unit @ $10/hr.)	$	33.00	per unit
Actual cost incurred:
Direct labor (22,920 hrs. @ $10.5/hr.)	$	240,660

Answer 1

WORKING NOTES:
									Actual output =	6400	Units
	Standard Cost Per unit		Standard Cost for Actual Production
	Standard Time	Std. Rate	Total Cost		Standard Time	Std. Rate	Total Std. Cost		Actual Time	Act. Rate	Actual Cost
	3.3	$             10.00	$                           33		21120	$     10.00	$               2,11,200		22920	$      10.50	$               2,40,660
	Hrs	Per Hours			Hrs (6400 X 3.3)	Per Hours			Hrs	Per Hours
SOLUTION : 1
	Labour Total Cost Variance = Standard Cost of Labour - Actual Cost of Labour
	Labour Cost Variance =	$         2,11,200.00	'-'	$          2,40,660.00
	Labour Cost Variance =	$             29,460.00	(Unfavorable)
SOLUTION : 2
	Labour Rate Variance = (Actual Rate - Standard Rate) X Actual Hours
	Labour Rate Variance =                 (	$                     10.50	'-'	$                      10.00	) X	22,920
	Labour Rate Variance =	$                        0.50	X	22,920
	Labour Rate Variance =	11460	(Unfavorable)
SOLUTION : 3
	Labour Efficiency Variance = (Actual Hours - Standard Hours ) X Standard Rate
	Labour Efficiency Variance = (	22,920.00	'-'	21,120.00	) X	$                     10.00
	Labour Efficiency Variance =	$               1,800.00	X	$                      10.00
	Labour Efficiency Variance =	18000	(Unfavorable)