The standard cost of product 5252 includes 1.90 hours of direct labor at $15.40
ID: 2534668 • Letter: T
Question
The standard cost of product 5252 includes 1.90 hours of direct labor at $15.40 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 $15.70 per hour and $81,200 of manufacturing overhead costs. It produced 2,000 units.
(a)
Compute the total, price, and quantity variances for labor.
(b)
Compute the total overhead variance.
Neither favorable nor unfavorableUnfavorableFavorable
Labor price variance $Neither favorable nor unfavorableFavorableUnfavorable
Labor quantity variance $Neither favorable nor unfavorableUnfavorableFavorable
Explanation / Answer
a Total labor variance = (4000*15.70)-(2000*1.9*15.4)= $4280 Unfavorable Labor price variance = 4000*(15.7-15.4)= $1200 Unfavorable Labor quantity variance = 15.4*(4000-2000*1.9)= $3080 Unfavorable b Total overhead variance = 81200-(2000*1.9*22)= $2400 Favorable
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