Question

Mordica Company’s standard labor cost per unit of output is $30.00 (2.50 hours x $12.00 per hour). During August, the company incurs 2,925 hours of direct labor at an hourly cost of $10.80 per hour in making 1,300 units of finished product.

Compute the total, price, and quantity labor variances. (Round answers to 2 decimal places, e.g. 52.75.)

Answer 1

Answer :-

Actual Hours = 2,925 hours

Actual rate = $10.80

Standard hours = 1300 units × 2.50 hours = 3,250 hours

Standard rate = $12

Total labor variance = (Actual hours × Actual rate) - (standard hours × Standard rate)

Total labor variance = (2,925 hours × $10.80) - (3,250 × $12)

Total labor variance = 31,590 - 39,000

Total labor variance = 7,410 F

Labor price variance = (Actual hours × Actual rate) - (Actual hours × Standard rate)

Labor price variance = (2,925 hours × $10.80) - (2,925 × $12)

Labor price variance = $31,590 - $35,100

Labr price variance = $3,510 F

Labor quantity variance = (Actual hours × Standard rate) - (standard hours × Standard rate)

Labor quantity variance = (2,925 hours × $12) - (3,250 × $12)

Labor quantity variance = $35,100 - $39,000

Labor quantity variance = $3,900 F