Lewis Company’s standard labor cost of producing one unit of Product DD is 3.8 h

Question

Lewis Company’s standard labor cost of producing one unit of Product DD is 3.8 hours at the rate of $10.9 per hour. During August, 41,500 hours of labor are incurred at a cost of $11.05 per hour to produce 10,800 units of Product DD.

(a)

Compute the total labor variance.

(b)

Compute the labor price and quantity variances.

(c)

Compute the labor price and quantity variances, assuming the standard is 4.1 hours of direct labor at $11.20 per hour.

Total labor variance $

  Unfavorable   Favorable   Neither favorable nor unfavorable  

Explanation / Answer

a)

b)

C)

Total Labor efficiency Variance Standard Labor Rate X Standard Labor Hours = Standard Cost - Actual Labor Hours X Actual Labor Hours = Actual Cost Variance 10.9 X 41040 447336 - 11.05 X 41500 458575 -11239

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