Goldman, Inc. manufactures lead crystal glasses. The standard direct labor time

Question

Goldman, Inc. manufactures lead crystal glasses. The standard direct labor time is 0.4 hour per glass, at a cost of $18 per hour. The actual results for one month's production of 6,200 glasses were 0.2 hours per glass, at a cost of $11 per hour. Calculate the direct labor cost variance and the direct labor efficiency variance. Select the formula, then enter the amounts and compute the cost variance for direct labor and identify whether the variance is favorable (F) or unfavorable (U) Adtuai CostStandard CoutActual Quanity Standard Cost x Actual QuantityDirect Labor Cost Variance 18 6200 43400 U Select the formula, then enter the amounts and compute the efficiency variance for direct labor and identify whether the variance is favorable (F) or unfavorable (U). (LAc ntityO.DS Standard Quantity ) xStandard Cost-Direct Labor Efficiency Variance antity )x?S Cost-Direct Labor Efficiency Variance 6200

Explanation / Answer

Standard direct labor hours = Standard direct labor hour per unit * Number of units
Standard direct labor hours = 0.40 * 6,200
Standard direct labor hours = 2,480

Standard direct labor rate per hour = $18

Actual direct labor hours = Actual direct labor hour per unit * Number of units
Actual direct labor hours = 0.20 * 6,200
Actual direct labor hours = 1,240

Actual direct labor rate per hour = $11

Direct Labor Cost Variance = (Actual direct labor rate per hour - Standard direct labor rate per hour) * Actual direct labor hours
Direct Labor Cost Variance = ($11 - $18) * 1,240
Direct Labor Cost Variance = $8,680 Favorable

Direct Labor Efficiency Variance = (Actual direct labor hours - Standard direct labor hours) * Standard direct labor rate per hour
Direct Labor Efficiency Variance = (1,240 - 2,480) * $18
Direct Labor Efficiency Variance = $22,320 Favorable

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