Custom Clubs produces handmade golf clubs. The process is labor intensive. The s

Question

Custom Clubs produces handmade golf clubs. The process is labor intensive. The speed at which a club can be built depends on the skill level of the individual worker. Management has established a standard of 2 labor hours per club. The standard wage rate is $12 per hour. During a recent month, 2,500 custom clubs were produced. Management was pleased that only 4,900 labor hours were worked; however, total wages amounted to $63,700.

Compute the total variance for labor, and determine how much is related to rate and efficiency components. Labor variances: Actual Labor Cost Actual hours of labor     Actual rate     Actual cost of direct labor     Standard Labor Cost Output - number of clubs                      - Standard hours per club $                   - Standard hours to achieve output                      - Standard rate per hour $                   - Standard cost of direct labor $                   - Total labor variance (standard cost v. actual cost)     Labor rate variance: Standard rate $                   - Actual rate                      - $                   - Actual hours                      - Unfavorable labor rate variance $                   - Labor efficiency variance: Standard hours                      - Actual hours                      -                      - Standard rate $                   - Favorable labor efficiency variance $                   - Custom Clubs produces handmade golf clubs. The process is labor intensive. The speed at which a club can be built depends on the skill level of the individual worker. Management has established a standard of 2 labor hours per club. The standard wage rate is $12 per hour. During a recent month, 2,500 custom clubs were produced. Management was pleased that only 4,900 labor hours were worked; however, total wages amounted to $63,700.

Compute the total variance for labor, and determine how much is related to rate and efficiency components. Labor variances: Actual Labor Cost Actual hours of labor     Actual rate     Actual cost of direct labor     Standard Labor Cost Output - number of clubs                      - Standard hours per club $                   - Standard hours to achieve output                      - Standard rate per hour $                   - Standard cost of direct labor $                   - Total labor variance (standard cost v. actual cost)     Labor rate variance: Standard rate $                   - Actual rate                      - $                   - Actual hours                      - Unfavorable labor rate variance $                   - Labor efficiency variance: Standard hours                      - Actual hours                      -                      - Standard rate $                   - Favorable labor efficiency variance $                   -

Explanation / Answer

Labor variance Actual Labor Cost Actual hours of labor 4900 Actual rate 13 Actula cost of direct labour 63700 Standard Labor cost Output - number of clubs 2500 Standard hours per club 2 Standard hours to achieve Output 5000 Standard rate per hour 12 Standard Cost for f Total Labour variance Standard rate 12 Actual rate 13 Actual Hours 4900 Unfavorable rate variance 4900 Labour Efficiency Vraince Standard hours 5000 Actual Hours 4900 Standard rate 12 Favorable labour efficiency variance 1200

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