After evaluating Null Company’s manufacturing process, management decides to est

Question

After evaluating Null Company’s manufacturing process, management decides to establish standards of 3 hours of direct labor per unit of product and $16.60 per hour for the labor rate. During October, the company uses 21,000 hours of direct labor at a $352,800 total cost to produce 7,200 units of product. In November, the company uses 23,600 hours of direct labor at a $398,840 total cost to produce 7,600 units of product.

Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor cost variance for each of these two months.

After evaluating Null Company’s manufacturing process, management decides to establish standards of 3 hours of direct labor per unit of product and $16.60 per hour for the labor rate. During October, the company uses 21,000 hours of direct labor at a $352,800 total cost to produce 7,200 units of product. In November, the company uses 23,600 hours of direct labor at a $398,840 total cost to produce 7,600 units of product.

Explanation / Answer

October: Direct labor rate variance=352800-(21000*16.60)= $4200 Unfavorable Direct labor efficiency variance=16.60*(21000-7200*3)= $9960 Favorable Total direct labor cost variance=352800-(7200*16.6*3)= $5760 Favorable November: Direct labor rate variance=398840-(23600*16.60)= $7080 Unfavorable Direct labor efficiency variance=16.60*(23600-7600*3)= $13280 Unfavorable Total direct labor cost variance=398840-(7600*16.6*3)= $20360 Unfavorable

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.