Exercise 8-9 Computing Labor Variances Fill in the missing figures for each of t

Question

Exercise 8-9 Computing Labor Variances Fill in the missing figures for each of the following independent cases (Round all rates to the nearest cent and all totals to the nearest dollar.) Use "F" and "U" to designate favorable and unfavorable variances. Enter all amounts positive numbers Case 1 Case 2 Standard production Standard hours per unit Standard hours allowed 1,200 2,000 1,200 2,400 Standard rate per hour $15 2 Actual hours used 2,340 1,220 Actual labor cost $35,825.4 2732.8 Labor rate variance $725 U $290 U Labor efficiency variance $400 U 900

Explanation / Answer

Case 1
Labor rate variance = (Standard rate - Actual rate) x Actual hours used
- $725 = ($15 - Actual rate ) x 2,340
Actual rate = $15.31

Actual labor cost = actual hours used x actual rate = 2,340 x $15.31 = $35,825

Case 2

Labor efficiency variance = (Standard hours - actual hours) x Standard rate per hour
- $400 = (1,200 - 1,220) x Standard rate per hour
Standard rate per hour = $20 per hour

Labor rate variance = (Standard rate - Actual rate) x Actual hours used
- $290 = ($20 - Actual rate ) x 1,220
Actual rate = $20.24

Actual labor cost = actual hours used x actual rate = 1,220 x $20.24 = $24,690

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