Question

The following data relate to product no. 33 of La Quinta Corporation:

Direct labor standard: 5 hours at $16 per hour
Direct labor used in production: 46,000 hours at a cost of $745,200
Manufacturing activity: 8,500 units completed

rev: 10_29_2012

36.

Required information

The direct-labor rate variance is:

$8,500F.

$8,500U.

$9,200F.

$9,200U.

None of these.

37.

Required information

The direct-labor efficiency variance is:

$56,000F.

$56,000U.

$8,100F.

$8,100U.

None of these.

Answer 1

The direct-labor rate variance = ( Actual Hours *Actual Rate) - ( Actual Hours * Standard Rate)

=( $745,200) - ( 46,000 hours * $ 16)

= $ 9,200 Unfavorable

Since the actual direct-labor rate is greater than the standard direct-labor rate , the variance is Unfavorable.

Hence the correct answer is :

$9,200U

---------

The direct-labor efficiency variance = Standard rate * ( Actual Hours - Standard Hours)

= $ 16 * [46,000 - (  8,500 units * 5 Hours)

= $ 16 * ( 46,000 -42,500)

= $ 56,000 Unfavorable

Since the Actual Direct Labor Hours is more than the standard Direct Labor Hours , the Variance is Unfavorable.

Hence, the correct answer is $56,000U