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Japan Company produces lamps that require 3 standard hours per unit at an hourly rate of...

Japan Company produces lamps that require 3 standard hours per unit at an hourly rate of $16.90 per hour. Production of 7,300 units required 22,560 hours at an hourly rate of $17.40 per hour. What is the direct labor for the following: Enter favorable variances as negative numbers.

a. Rate Variance $
b. Time Variance $
c. Cost Variance $
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Answer #1
a) Labor rate variance = Actual Hours worked* (Actual Rate - Standard Rate)
=22560 *($17.40-16.90)
=11280 ( unfovorable)
b) Labor time variance = Standard rate *[ actual hours - standard hours for actual production]
=$16.90*[22560-(7300*3)]
=$16.90*(22560-21900)
=$11154 (unfavorable)
c) Cost vaiance = actual cost - standard cost
=($17.40*22450) -(7300*3*16.90)
=$392544 -370110
=$22434 (unfavorable)
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