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 :-
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
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