Exercise 23-6

Lewis Companys standard labor cost of producing one unit of Product DD is 3.1 hours at the rate of $12.7 per hour. During August, 42,200 hours of labor are incurred at a cost of $12.80 per hour to produce 13,500 units of Product DD. (a) Compute the total labor variance.

Total labor variance $ Unfavorable Favorable Neither favorable nor unfavorable

(b) Compute the labor price and quantity variances.

Labor price variance $ Favorable Neither favorable nor unfavorable Unfavorable Labor quantity variance $ Favorable Neither favorable nor unfavorable Unfavorable

(c) Compute the labor price and quantity variances, assuming the standard is 3.4 hours of direct labor at $12.95 per hour.

Labor price variance $ Neither favorable nor unfavorable Unfavorable Favorable Labor quantity variance $ Neither favorable nor unfavorable Unfavorable Favorable