Based on the standard set by Tish Company, 5500 direct labor hours should have b

Question

Based on the standard set by Tish Company, 5500 direct labor hours should have been used in production this period at a cost of $20 per hour. The actual results indicate that 5,400 hours were used at a total cost of $113,400. What is the direct labor usage variance? O 2,100 F O2,100 U 2,000 F 2,000 U Question 11 1 pts Jorrey Company manufactures bookcases. Direct materials standards are 20 board feet of lumber per bookcase at a cost of $2.50 per board foot. During the month of July, Jorrey purchased 25,000 board feet of lumber at a total cost of $60,000. What is the direct materials price variance? 2,500 F O2,100 U O2,100 F 2,500 U

Explanation / Answer

Answer:- Labor Efficiency variance = (Standard Hours- Actual hours)*Standard rate per hour

                                               =(5500 hours-5400 hours)*$20 per hour

                                              =$2000 Favourable

Where:-

Standard hours:-The time allowed by standards to manufacture that number of units.

Direct material price variance=(Standard rate-Actual rate)*Actual units used

                                              =Difference in rate*Actual quantity used

                                   =($2.50 per board foot-$2.4 per board foot)*25000 board feet

                                   =$2500 Favourable

Actual rate per board foot=Total cost/Actual board feet of lumber purchased

                                       =$60000/24000 =$2.4 per board foot

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