Paradise Corp. has determined a standard labor cost per unit of $8.50 (1 hourx $

Question

Paradise Corp. has determined a standard labor cost per unit of $8.50 (1 hourx $8.50 per hour). Last month, Paradise incurred 1,300 direct labor hours for which it paid $10,400. The company also produced and sold 1,350 units during the month. Calculate the direct labor rate, efficiency, and spending variances. (Round your intermediate calculations to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Direct Labor Rate Variance Direct Labor Efficiency Variance Total Direct Labor Spending Variance

Explanation / Answer

Actual Rate Actual Hour Total Cost 8.00 1300 10400 Direct Labor rate variance          (Standard Rate-Actual Rate)*Actual Hours (8.50-8)*1300 650F Direct Labor Effeciency Variance     (Standard Hours-Actual hours)*Standard rate (1350-1300)*8.50 425F Total Direct Labor Spending Variance              (650+425) 1075 F

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