Exercise 200 Shep Corporation estimated it would produce 6,200 buckets, though a

Question

Exercise 200 Shep Corporation estimated it would produce 6,200 buckets, though actual production was 6,000 during August. The standard labor cost is 2 buckets per hour at $18.00 per hour. Actual cost per hour was $18.40 with a total labor cost of $53,360 Determine the amounts of the labor price and the labor quantity variances for August. Identify whether the variance is favorable or unfavorable? Labor Price Variance Labor Quantity Variance Click if you would like to Show Work for this question: s

Explanation / Answer

Labor price (rate) variance = (Actual hours × Actual rate) – (Actual hours × Standard rate)

= (2,900 × $18.40) – (2,900 × $18) = $1,160 Unfavorable

Labor quantity (efficiency) variance = (Actual hours × Standard rate) – (Standard hours × Standard rate)

= (2,900 × $18) – [(6,000 × 1/2 × $18) = $1,800 Favorable

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