The standard cost of product 5252 includes 1.90 hours of direct labor at $13.40

Question

The standard cost of product 5252 includes 1.90 hours of direct labor at $13.40 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 $13.70 per hour and $82,600 of manufacturing overhead costs. It produced 2,000 units. Compute the total, price, and quantity variances for labor. Total labor variance Labor price variance Labor quantity variance Compute the total overhead variance. Total overhead variance

Explanation / Answer

a) Total labour variance = (2000*1.9*13.40)-(4000*13.70) = 3880 U

Labour price variance = (13.40-13.70)*4000 = 1200 U

Labour efficiency variance = (3800-4000)*13.4 = 2680 U

b) Total overhead variance = 82600-(2000*1.9*22) = 1000 F

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