Kendra Company\'s standard labor cost of producing one unit of Product DD is 4 h
ID: 2349861 • Letter: K
Question
Kendra Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.84 per hour. During August, 40,800 hours of labor are incurred at a cost of $12.95 per hour to produce 10,000 units of Product DD.Compute the total labor variance.
$ favorable or unfavorable?
Compute the labor price and quantity variances.
Labor price variance $ favorable or unfavorable?
Labor quantity variance $ favorable or unfavorable?
Repeat the previous question, assuming the standard is 4.2 hours of direct labor at $13.11 per hour.
Labor price variance $ favorable or unfavorable?
Labor quantity variance $ favorable or unfavorable?
Explanation / Answer
Actual hours = 40,800
Standard hours = 10,000 * 4 = 40,000
Actual rate = 12.95
Standard rate = 12.84
Total labor variance = Actual hours*Actual rate - Standard hours * standard rate = 40,800*12.95 - 40,000 * 12.84 = $14760 unfavorable
Labor price variance = actual hours*(actual rate - standard rate ) = 40,800*(12.95 - 12.84) = $4488 unfavorable
Labor quantity variance = standard rate*(actual hours - standard hours) = 12.84*(40,800 - 40,000) = $10,272 unfavorable
second question:
Standard hours = 4.2*10,000 = 42,000
Standard rate = 13.11
Actual hours = 40,800
Actual rate = 12.95
Total labor variane = actual hours * actual rate - standard hours * standard rate = -22,260 which is $22,260 favorable.
Labor price variance = Actual hours * (actual rate - standard rate) = 40,800*(12.95-13.11) = -6528, which is $6528 favorable
Labor quantity variance = standard rate*(actual hours - standard hours) = 13.11*(40,800 - 42,000) = -15,732, which is $15,732 favorable
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