Question

Heath Construction builds standard prefabricated wooden frames for walls. Each frame requires 10 direct labor hours...

Heath Construction builds standard prefabricated wooden frames for walls. Each frame requires 10 direct labor hours and the standard hourly direct labor rate is $18. During July, the company produced 670 frames and worked 6,800 direct labor hours. Payroll records indicate that workers earned $127,500.

a. What were the standard hours for July construction?

b. Calculate the direct labor variances.

c. What was the actual hourly wage rate?

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Answer #1

a. Standard Hours for July Construction=

670 frames X 10 Direct Labour Hour each= 6700 Hours

b. Direct Labour Rate Variance= (Standard rate - Actual rate) X Actual Hours

Actual rate= 127500/6800= 18.75

= (18 - 18.5) X 6800= (3400)

Direct Labour Efficiency Variance= (Standard hours for Actual Production - Actual Hours) X Standard Rate

= (6700 - 6800) X 18= (1800)

Direct Lobour Cost Variance= is Difference Between actual direct wages incured and the standard direct wages specified for the Activity

standard direct wages specified for the Activity= 6700X18= 120600

=127500- (6700X18)= 127500 - 120600= 6900

c. Actual Hourly wage rate= 127500/6800= 18.75

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