Exercise 23-6 Lewis Company\'s standard labor cost of producing one unit of Prod
ID: 2586328 • Letter: E
Question
Exercise 23-6 Lewis Company's standard labor cost of producing one unit of Product DD is 3.0 hours at the rate of $12.6 per hour. During August, 40,500 hours of labor are incurred at a cos of $12.75 per hour to produce 13,300 units of Product DD. Compute the total labor variance. Total labor variance Unfavorable Compute the labor price and quantity variances Labor price variance Labor quantity variances Unfavorable Unfavorable Compute the labor price and quantity variances, assuming the standard is 3.2 hours of direct labor at $12.85 per hour. Labor price variances Labor quantity variancesExplanation / Answer
(a) Total labor variance = Total Actual Cost incurred - Total Standard Cost
.....................................= (40,500 hours x $12.75) - (3 hour x 13,300 units x $12.6)
.....................................= $516,375 - $502,740
.....................................= $13,635 Unfavorable
(b) Labor Price Variance = (Standard Price per hour - Actual Price per hour) x Actual hours used
........................................= ($12.60 - $12.75) x 40,500 hours
........................................= $6,075 Unfavorable
Labor Quantity Variance = (Total Standard hours - Total Actual hours) x Standard Price per hour
........................................= (3 hour x 13,300 units - 40,500 hour) x $12.60
........................................= (39,900 hours - 40,500 hours) x $12.60
........................................= $7,560 Unfavorable
(c) Labor Price Variance = (Standard Price per hour - Actual Price per hour) x Actual hours used
........................................= ($12.85 - $12.75) x 40,500 hours
........................................= $4,050 Favorable
Labor Quantity Variance = (Total Standard hours - Total Actual hours) x Standard Price per hour
........................................= (3.2 hour x 13,300 units - 40,500 hour) x $12.85
........................................= (42,560 hours - 40,500 hours) x $12.85
........................................= $26,471 Favorable
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