Lewis Company’s standard labor cost of producing one unit of Product DD is 3.3 h

Question

Lewis Company’s standard labor cost of producing one unit of Product DD is 3.3 hours at the rate of $14.2 per hour. During August, 43,500 hours of labor are incurred at a cost of $14.40 per hour to produce 13,000 units of Product DD. (a) Compute the total labor variance. Total labor variance $ (b) Compute the labor price and quantity variances. Labor price variance $ Labor quantity variance $ (c) Compute the labor price and quantity variances, assuming the standard is 3.7 hours of direct labor at $14.60 per hour. Labor price variance $ Labor quantity variance $

Explanation / Answer

Labor price variance:

= Actual hours×Standard rate- Actual labor paid

= 43,500×($14.20-$14.40)

= $8,700 A

Labor quantity variance:

= Standard hours×Standard rate- Actual hours×Standard rate

= $14.20×(13,000×3.30-43,500)

= $8,520 A

Total labor variance:

= Price variance+Quantity variance

= $8,700 A+$8,520 A

= $17,220 A

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