Kendra Company\'s standard labor cost of producing one unit of Product DD is 4 h

Question

Kendra Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour. During August, 40,800 hours of labor are incurred at a cost of $12.10 per hour to produce 10,000 units of Product DD.


Compute the total labor variance.

$



Compute the labor price and quantity variances.

Labor price variance $
Labor quantity variance $



Repeat the previous question, assuming the standard is 4.2 hours of direct labor at $12.25 per hour.

Labor price variance $
Labor quantity variance $

Explanation / Answer

(a) Total labor variance: = ( AH X AR ) - ( SH X SR ) = (40,800 X $12.10) - (40,000* X $12.00) = $493,680 - $480,000 = $13,680 U *10,000 X 4 (b) Labor price variance: = ( AH X AR ) - ( AH X SR ) = (40,800 X $12.10) - (40,800 X $12.00) = $493,680 - $489,600 = $4,080 U Labor quantity variance: = ( AH X SR ) - ( SH X SR ) = (40,800 X $12.00) - (40,000 X $12.00) = $489,600 - $480,000 = $9,600 U (c) Labor price variance: = ( AH X AR ) - ( AH X SR ) = (40,800 X $12.10) - (40,800 X $12.25) = $493,680 - $499,800 = $6,120 F Labor quantity variance: = ( AH X SR ) - ( SH X SR ) = (40,800 X $12.25) - (42,000 X $12.25) = $499,800 - $514,500 = $14,700 F

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