Do It! Review 11-3 The standard cost of product 5252 includes 1.90 hours of dire

Question

Do It! Review 11-3

The standard cost of product 5252 includes 1.90 hours of direct labor at $14.00 per hour. The predetermined overhead rate is $22.00 per direct labor hour. During July, the company incurred 4,000 hours of direct labor at an average rate of $14.30 per hour and $81,300 of manufacturing overhead costs. It produced 2,000 units.

(a)

Compute the total, price, and quantity variances for labor.

(b)

Compute the total overhead variance.

Total labor variance $ Neither favorable nor unfavorableUnfavorableFavorable Labor price variance $ UnfavorableFavorableNeither favorable nor unfavorable Labor quantity variance $ UnfavorableNeither favorable nor unfavorableFavorable

Explanation / Answer

Total Labour Variance = Total Standard Cost- Total Actual Cost 2000*1.9*14-4000*14.30 53200-57200 4000 Unfavourable Labour Price Variance = (Standard Cost per Hour- Actual Cost per hour) * Actual Hours (14-14.30)4000 1200 Unfavourable Labour Quantity Variance = ( Standard Hours- Actual Hours) Std Rate per Hour (2000*1.9-4000)14 2800 Unfavourable Overhead Varianee = 2000*1.9*22-81300 83600-81300 2300 Favourable

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