Lewis Company’s standard labor cost of producing one unit of Product DD is 3.7 h

Question

Lewis Company’s standard labor cost of producing one unit of Product DD is 3.7 hours at the rate of $10.6 per hour. During August, 40,400 hours of labor are incurred at a cost of $10.75 per hour to produce 10,800 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 4.1 hours of direct labor at $10.95 per hour. Labor price variance $ Labor quantity variance $

Explanation / Answer

Labour Price Variance ( Standard Rate per Hour- Actual Rate Per Hour) Actual Hours (10.6-10.75)*40400 (-.15)*40400 Labour Price Variance $6060 Unfavourable Labour Quantity Variance ( Standard Hours- Actual Hours) * Standard Rate per Hour (10800*3.7-40400)*10.6 (39960-40400)*10.6 $ 4664 Unfavourable Total Labor Variance = 6060+4664 10724 Unfavourable If the standard Rate is 10.95 per hour at 4.1 Hours Labour Price Variance ( Standard Rate per Hour- Actual Rate Per Hour) Actual Hours (10.95-10.75)*40400 (.20)*40400 8080 Labour Price Variance $ 8080 Favourable Labour Quantity Variance ( Standard Hours- Actual Hours) * Standard Rate per Hour (10800*4.1-40400)*10.95 (44280-40400)*10.95 $ 42486 favourable

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