Question

Roman Mfg.'s July production involved actual direct labor costs of $41,514 for 3,400 direct labor hours. The budget for the July level of production called for 3,500 direct labor hours at $12.20 per hour, using a standard cost system.

1. Roman's labor rate variance for July is:

2. Roman's labor efficiency variance for July is:

Answer 1

1)
	Labor rate variance	=	(Standard rate-Actual rate)*Actual labor hours
		=	(12.20-12.21)*3400
		=	$           34	Unfavorable
	Working:
	Actual Labor rate	=	Actual Direct Labor costs/Actual direct labor hours
		=	$     41,514	/	3,400
		=	$      12.21
2)
	Labor Efficiency variance	=	(Standard hours-Actual hours)*Standad labor rate
		=	(3500-3400)*12.20
		=	$      1,220	Favorable

answered by: anonymous