The records of Norton, Inc. show the following for July: The records of Norton,

Question

The records of Norton, Inc. show the following for July:

The records of Norton, Inc. show the following for July: 2.5 Standard labor-hours allowed per unit of output Standard variable overhead rate per standard direct labor-hour Good units produced Actual direct labor-hours worked Actual total direct labor Direct labor efficiency variance Actual variable overhead 40 60,000 151,000 $7,649,000 $ 50,000 U $5,839,000 Required: Compute the direct labor and variable overhead price and efficiency variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Direct labor: Price variance Efficiency variance Variable overhead: Price variance Efficiency variance

Explanation / Answer

Labour Variance :

Labour efficiency variance = (standard hours-actual hours)standard price

-50000 = (150000-151000)X

-50000 = -1000X

X(standard price) = 50 per hours

Labour price variance = (standard price-actual price)actual hours

= (50*151000-7649000)

Labour price variance = 99000 U

Variable overhead Variance :

Labour efficiency variance = (standard hours-actual hours)standard price

= (150000-151000)40

Labour efficiency variance = 40000 U

Labour price variance = (standard price-actual price)actual hours

= (40*151000-5839000)

Labour price variance = 201000 F

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