Question 1 Amos, Inc. uses a standard cost system with the following labor stand

Question

Question 1 Amos, Inc. uses a standard cost system with the following labor standards for one unit of product: standard hours 0.2 and standard wage rate $9. During January, Amos incurred 3,957 hours of direct labor and paid $35,127 in wages in production of 19,300 units. Calculate the direct labor rate and efficiency variances and indicate whether the variances are favorable or unfavorable Direct labor rate variance Direct labor efficiency variance Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Direct labour rate variance = ( standard rate - actual rate)* actual hours

= (9 - (35127/3957) )* 3957

= ( 9 - 8.88 )*3957

= $ 474.84 favourable

Direct labour efficiency variance = ( standard hours - actual hours)* standard rate

=(0.2*19300 - 3957)* 9

= (3860 - 3957)*9

= $873 unfavorable

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