Question

At Roger, the standard quantity of labor is 25 hours per refrigeration unit. The standard wage...

At Roger, the standard quantity of labor is 25 hours per refrigeration unit. The standard wage rate is \$36. In July, the company produced 83 refrigeration units and incurred 2,100 labor hours at a cost of \$65,100.

Calculate the labor rate variance and the labor efficiency variance. Indicate whether the variances are favorable or unfavorable. (Round intermediate calculations to 2 decimal places, e.g. 14.37 and final answers to 0 decimal places, e.g. 125. Enter all variances as a positive number.)

Labor Rate Variance \$___________   Unfavorable, Neither Unfavorable nor Favorable, Favorable?

Labor Efficiency Variance    \$_________ Unfavorable, Neither Unfavorable nor Favorable, Favorable?

direct labor rate variance = (Actual rate - standard rate) * actual hours.

here,

actual rate = \$65,100 cost / 2100 hours

=>\$31.

standard rate = \$36.

actual hours = 2100

direct labor rate variance = (\$31 - \$36)*2100

=>\$10,500 Favorable.

direct labor efficiency variance

(actual hours - standard hours) *standard rate

here,

actual hours = 2100 hours

standard hours = 83 units *25 hours

=>2,075 hours

standard rate = \$36.

=> (2100 - 2075)*\$36

=>\$900 unfavorable.

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