In: Accounting
The following labor standards have been established for a particular product:
Standard labor-hours per unit of output |
9.0 |
hours |
|
Standard labor rate |
$ |
16.60 |
per hour |
The following data pertain to operations concerning the product for the last month:
Actual hours worked |
9,600 |
hours |
|
Actual total labor cost |
$ |
156,480 |
|
Actual output |
950 |
units |
|
What is the labor rate variance for the month?
$17,115 U
$14,550 F
$2,880 F
$14,550 U
Correct Answer:
Option: $ 2880 F
Working:
Labor rate variance |
$ 2,880.00 |
Favourable-F |
A |
Actual Hours worked |
$ 9,600 |
B |
Actual labor cost |
$ 1,56,480 |
C =B/A |
Actual Labor cost per unit |
$ 16.30 |
Actual DATA for |
950 |
Units |
|
Quantity (AQ) |
Rate (AR) |
Actual Cost |
|
Direct labor |
9600 |
$ 16.30 |
$ 1,56,480 |
Standard DATA for |
950 |
Units |
|
Quantity (SQ) |
Rate (SR) |
Standard Cost |
|
[A] |
[B] |
[A x B] |
|
Direct labor |
( 9 hours x 950 Units)=8550 hours |
$ 16.60 |
$ 1,41,930.00 |
Labor Rate Variance |
||||||
( |
Standard Rate |
- |
Actual Rate |
) |
x |
Actual Labor Hours |
( |
$ 16.60 |
- |
$ 16.30 |
) |
x |
9600 |
2880 |
||||||
Variance |
$ 2,880.00 |
Favourable-F |
||||
End of Answer.
Thanks