ofoutput is s32.(2.9 hursx 11.30 pe company incurs 3,532 hours of direct labar a

Question

ofoutput is s32.(2.9 hursx 11.30 pe company incurs 3,532 hours of direct labar at an hourly cost of $11.75 per hour in making 1,200 units of finished product Mordica Company's standard labor cost per unit of output is $32.77 (2.90 hours x $11.30 per hour). During August, the company incurs 3,532 hours of direct labor at an hourly cost of $11.75 per hour in making 1,200 units of finished product. Compute the total, price, and quantity labor variances. (Round answers to 2 decimal places, e.g. 52.75 Total labor variance s Labor price variance Labor quantity variance

Explanation / Answer

Total labor varaince = Standard cost for actual output - Actual cost

Standard cost for actual output = standard cost per unit * Actual units = $32.77 *1200 = $39324

Actual cost = Actual cost per hour * actual hrs = $11.75 *3532 = $41501

Total labor variance = $39324 - $41501 = ($2177) Unfavorable

Labor price variance = Actual time * (standard rate - actual rate)

= 3532 * ($11.30 - $11.75)

= 3532 * ($-0.45) = ($1589.4) Unfavorable

Labor quanity variance = Standard rate * (standard time for actual output - actual time)

Standard time for actuaal output = 2.9 hrs * 1200 units = 3480

=$11.30 * (3480 - 3532)

=$11.30 * (-52) = ($587.6) Unfavorable

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