Question

In: Accounting

The following labor standards have been established for a particular product: Standard labor-hours per unit of...

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

Solutions

Expert Solution

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

ekkarill92 answered 2 years ago
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