Question

Sarah Aiken is the owner of Ridgewood Paws, a dog-grooming service. At standard, it takes 1.0 hour to groom each dog. During the month of October, it took Ridgewood Paws employees 338 hours to groom 313 dogs, at a total labor cost of $4,732. In November, employees spent 371 hours grooming 322 dogs, at a total labor cost of $6,604; in December, 381 hours were used to groom 312 dogs, at a total labor cost of $7,544. The wage rate standard for groomers is $14 per hour.

(a) Calculate the labor rate and efficiency variances for each of the past three months. (Round per unit amounts to 2 decimal places and final answers to 0 decimal places, e.g. 125. Enter all variances as a positive number.)

October November December

Labor Rate Variance $

UnfavorableFavorableNeither Unfavorable nor Favorable $

UnfavorableNeither Unfavorable nor FavorableFavorable $

FavorableNeither Unfavorable nor FavorableUnfavorable

Labor Efficiency Variance $

UnfavorableFavorableNeither Unfavorable nor Favorable $

UnfavorableNeither Unfavorable nor FavorableFavorable $

Neither Unfavorable nor FavorableUnfavorableFavorable

Answer 1

October:

Actual number of dogs groomed = 313

Standard hours = Actual number of dogs groomed * Standard hours per dog groomed
Standard hours = 313 * 1.0
Standard hours = 313

Labor rate variance = Actual labor cost - Actual hours * Standard labor rate per hour
Labor rate variance = $4,732 - 338 * $14.00
Labor rate variance = $0 (Neither unfavorable nor favorable)

Labor efficiency variance = Standard labor rate per hour * (Actual hours - Standard hours)
Labor efficiency variance = $14.00 * (338 - 313)
Labor efficiency variance = $350 (Unfavorable)

November:

Actual number of dogs groomed = 322

Standard hours = Actual number of dogs groomed * Standard hours per dog groomed
Standard hours = 322 * 1.0
Standard hours = 322

Labor rate variance = Actual labor cost - Actual hours * Standard labor rate per hour
Labor rate variance = $6,604 - 371 * $14.00
Labor rate variance = $1,410 (Unfavorable)

Labor efficiency variance = Standard labor rate per hour * (Actual hours - Standard hours)
Labor efficiency variance = $14.00 * (371 - 322)
Labor efficiency variance = $686 (Unfavorable)

December:

Actual number of dogs groomed = 312

Standard hours = Actual number of dogs groomed * Standard hours per dog groomed
Standard hours = 312 * 1.0
Standard hours = 312

Labor rate variance = Actual labor cost - Actual hours * Standard labor rate per hour
Labor rate variance = $7,544 - 381 * $14.00
Labor rate variance = $2,210 (Unfavorable)

Labor efficiency variance = Standard labor rate per hour * (Actual hours - Standard hours)
Labor efficiency variance = $14.00 * (381 - 312)
Labor efficiency variance = $966 Unfavorable