Delmar Inc. uses a standard cost system. Labor standards are 2.0 hours per widge

Question

Delmar Inc. uses a standard cost system. Labor standards are 2.0 hours per widget at $9.50 per hour During August, Delmar Inc paid its workers $158,790 for 16,500 hours. Delmar Inc. produced 8,600 widgets during August. a. Calculate the direct labor rate variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e, zero variance).) e Varlance b. Calculate the direct labor efficiency varlance. (Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e, zero variance).) Efficiency Varia Type here to search

Explanation / Answer

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

= (9.5*16500-158790)

Labour rate variance = 2040 Unfavourable

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

= (8600*2-16500)9.5

Labour efficiency variance = 6650 Favourable

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