Nickson standard labor cost of producing one unit of Product DD is3.20hours at t

Question

Nickson standard labor cost of producing one unit of Product DD is3.20hours at the rate of $11.00per hour. During August,40,600hours of labor are incurred at a cost of $11.12per hour to produce12,500units of Product DD.
THE DROP DOWN TITLES ARE:FAVORABLE, UNFAVORABLE and NEITHER FAVORABLE OR UNFAVORABLE
(a) Compute the total labor variance.

(b) Compute the labor price and quantity variances.

(c) Repeat (b), assuming the standard is3.40hours of direct labor at $11.27per hour.

Explanation / Answer

A) 11472 (U)

Price Variance = (11.12-11)*40600 =4872 (U)

Qty Variance =(40,600*11) - (40,000*11) = 6600 (U)

c)

Price Variance = (11.12-11.27)*40600 = 6090(F)

Qty Variance =(40,600*11.27) - (42,500*11.27) = 21413 (F)

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