Question

Williams Corporation reports the following direct labor information for November:

Standard rate	$	34.00	per hour
Actual rate paid	$	34.90	per hour
Standard hours allowed for actual production		44,700	hours
Labor efficiency variance	$	234,600	F

Required:

Based on these data, what was the number of actual hours worked and what was the labor price variance? (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Actual Hours Worked ___ hours

Labor Price Variance ______ ______

Answer 1

Actual direct labor rate per hour = $34.90
Standard direct labor rate per hour = $34.00
Standard hours allowed = 44,700

Labor Efficiency Variance = Standard direct labor rate per hour * (Actual hours worked - Standard hours allowed)
-$234,600 = $34.00 * (Actual hours worked - 44,700)
-6,900 = Actual hours worked - 44,700
Actual hours worked = 37,800

Labor Price Variance = Actual hours worked * (Actual direct labor rate per hour - Standard direct labor rate per hour)
Labor Price Variance = 37,800 * ($34.90 - $34.00)
Labor Price Variance = $34,020 Unfavorable