Paradise Corp, has determined a standard labor cost per unit of $12.00 (1 hour x

Question

Paradise Corp, has determined a standard labor cost per unit of $12.00 (1 hour x $12.00 per hour), Last month, Paradise incurred 2,000 direct labor hours for which it paid $23,000. The company also produced and sold 2,050 units during the month. Calculate the direct labor rate, efficiency, and spending variances. (Round your intermediate calculations to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Direct Labor Rate Variance Direct Labor Eficiency Variance Total Direct Labor Spending Variance

Explanation / Answer

Labour rate variance = (Standard rate-actual rate)actual hours

                                   = (12*2000-23000)

Labour rate variance = 1000 F

Labour efficiency variance = (Standard hour-actual hour)standard rate

                                            = (2050*1-2000)*12

Labour efficiency variance = 600 F

Labour spending variance = Standard cost-actual cost

                                          = (2050*12)-23000

Labour spending variance = 1600 F

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