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26 February, 22:14

The standards for product G78V specify 5.6 direct labor-hours per unit at $13.60 per direct labor-hour. Last month 1,750 units of product G78V were produced using 9,850 direct labor-hours at a total direct labor wage cost of $130,220. Required: a. What was the labor rate variance for the month? b. What was the labor efficiency variance for the month?

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  1. 27 February, 02:08
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    a. $3,740 Favorable

    b. $680 Unfavorable

    Explanation:

    The computation of labor rate variance and labor efficiency variance is shown below:-

    Labor rate variance = Actual cost - (Actual hours * Standard rate)

    = $130,220 - (9,850 * $13.60)

    = $130,220 - 133,960

    = $3,740 Favorable

    Labor efficiency variance = Standard rate * (Actual hours - Standard hours)

    = $13.60 * (9,850 - 1,750 * 5.6)

    = $13.60 * 50

    = $680 Unfavorable
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