Lewis Company’s standard labor cost of producing one unit of Product DD is 3.60

Question

Lewis Company’s standard labor cost of producing one unit of Product DD is 3.60 hours at the rate of $14.00 per hour. During August, 41,400 hours of labor are incurred at a cost of $14.13 per hour to produce 11,300 units of Product DD.

Compute the total labor variance.

Compute the labor price and quantity variances.

Repeat (b), assuming the standard is 3.80 hours of direct labor at $14.27 per hour. (Round answers to 0 decimal places, e.g. 5,275.)

Explanation / Answer

SR 14 SH 3.6 AR 14.13 AH 3.66 (41400/11300) AO 11300 Labor Price Variance AO(SR-AR) 11300(14-14.13) -1469 U Labor Quantity Variance AO(SH-AH) 11300(3.6-3.66) -678 U b SR 14.27 SH 3.8 AR 14.13 AH 3.66 (41400/11300) AO 11300 Labor Price Variance AO(SR-AR) 11300(14.27-14.13) 1582 F Labor Quantity Variance AO(SH-AH) 11300(3.8-3.66) 1582 F

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