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 $13.70 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 $14.00 per hour and $80,500 of manufacturing overhead costs. It produced 2,000 units. (a) Compute the total, price, and quantity variances for labor. Total labor variance $ Labor price variance Labor quantity variance $ (b) Compute the total overhead variance. Total overhead variance & LINK TO TEXT

Explanation / Answer

a) Total labour variance = (2000*1.9*13.70)-(4000*14) = 3940 U

Labour rate variance = (13.70-14)*4000 = 1200 U

Labour efficiency variance = (2000*1.9-4000)*13.70 = 2740 U

b) Total overhead variance = 80500-(2000*1.9*22) = 3100 Favorable

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