Question

Marigold Co. produces wooden boxes. The company’s standards per box require 6 boards, each costing $11 per board, and half of an hour of direct labour. The standard labour rate is $16 per hour. In August, Marigold Co. Purchased 11950 boards for a total cost of $122800. It used 11500 boards to manufacture 1850 boxes. Total labour hours were 1050 hours, and total labour costs were $16400.

What was the labour quantity variance for August?

Answer 1

Standard rate = $16 per hour

Standard time = 0.5 hour pper unit

Actual output = 1,850 units

Standard time for actual output = Standard time x Actual output

= 0.50 x 1,850

= 925 hour

Actula time = 1,050 hours

labour quantity variance = Standard rate x (Standard time for actual output - Actula time)

= 16 x (925 - 1,050

= 16 x -125

= $2,000 (unfavorable)

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