After evaluationg Null Company\'s manufacturing process, management decides to e

Question

After evaluationg Null Company's manufacturing process, management decides to establish standards of 3 hours of direct labor per unt of product and 15.90 per hour for the labor rate. During October, the company uses 19,100 hours of direct labor at a 307,510 total cost to produce 6,500 units of product. In November, the comapny uses 21,400 hours of direct laobr at a 346,680 total cost to produce 6,800 units of product.

Compute the rate variance, the efficiency variance and the total direct labor costs for October and November

Explanation / Answer

October Actual Cost 3820 -6360 Standard Cost AH AR AH SR SH SR 19,100 $16.10 19,100 $15.90 19,500 $15.90 $307,510 $303,690 $310,050 3820 2540 6360 Direct labor rate variance 3820 Unfavorable Direct labor efficiency variance 6360 Favorable Total direct labor variance $2,540 Favorable November Actual Cost 6420 15900 Standard Cost AH AR AH SR SH SR 21,400 $16.20 21,400 $15.90 20,400 $15.90 $346,680 $340,260 $324,360 6420 22320 15900 Direct labor rate variance 6420 Unfavorable Direct labor efficiency variance 15900 Unfavorable Total direct labor variance $22,320 Unfavorable

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