The H55 Company uses a standard costing system. In August, 5,950 actual labor ho

Question

The H55 Company uses a standard costing system. In August, 5,950 actual labor hours were worked at a rate of $12.60 per hour. The standard number of hours is 4,840 and the standard wage rate is $13.50 per hour.

Exercise 11-14 The H55 Company uses a standard costing system. In August, 5,950 actual labor hours were worked at a rate of $12.60 per hour. The standard number of hours is 4,840 and the standard wage rate is $13.50 per hour. Determine the Labor Rate and Variance Labor Efficiency Variance. (Enter all variances as a positive number.) Labor Rate Variance Labor Efficiency Variance s

Explanation / Answer

a. Labor rate variance: (Actual hours worked × Actual rate) – (Actual hours worked × Standard rate) = (5,950 × 12.6) – (5,950 × 13.5) = 74,970 – 80,325 = 5,355 Favorable b. Labor efficiency variance: (Actual hours worked × Standard rate) – (Standard hours allowed × Standard rate) = (5950 × 13.5) – (4,840 × 13.5) = 80,325 – 65340 = 14,985 Unfavorable Account Name Debit Credit Work in process (4,840 x 13.5)    65,340 Labour efficiency variance    14,985 Labour rate variance      5,355 Wages payable (5,950 x 12.6)    74,970

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