Question

During March 2020, Toby Tool & Die Company worked on four jobs. A review of direct labor costs reveals the following summary data.

		Actual				Standard
Job Number		Hours		Costs		Hours		Costs		Total Variance
A257		200		$4,200		207		$4,347		$147	F
A258		440		10,120		424		8,904		1,216	U
A259		300		6,600		300		6,300		300	U
A260		110		2,200		105		2,205		5	F
Total variance										$1,364	U

Analysis reveals that Job A257 was a repeat job. Job A258 was a rush order that required overtime work at premium rates of pay. Job A259 required a more experienced replacement worker on one shift. Work on Job A260 was done for one day by a new trainee when a regular worker was absent.

Prepare a report for the plant supervisor on direct labor cost variances for March. (Round actual rate and standard rate to 2 decimal places, e.g. 10.50.)

Answer 1

Solution:

Job Number	Actual Hours	Standard Hours	Actual cost	Actual Rate	Standard cost	Standard Rate	Quantity varinace		price variance		Total Variance
=	=
(actual cost / actual hrs)	(Standard cost / standard hrs)
A257	200	207	$ 4,200	$     21	4347	$       21	$        147	F	-		$ 147	F	Repeat job
A258	440	424	$ 10,120	$     23	8904	$       21	$      (336)	U	$ (880)	U	$ (1,216)	U	Rush job
A259	300	300	$ 6,600	$     22	6300	$       21	-		$     (300)	U	$      (300)	U	Replacement worker
A260	110	105	$ 2,200	$ 20	2205	$       21	$      (105)	U	$       110	F	$ 5	F	New trainee
									Total		$ (1,364)

Quantity variance= (standard hours -Actual hours) * standard rate

Price variance = (standard rate - actual rate) * actual hours

Total variance = Quantity varince + Price Variance

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