Question
Marlo Enterprises produces radon mitigation pumps. Information pertaining to the companys monthly direct labor usage is provided below: Standard labor rate per hour . .
Marlo Enterprises produces radon mitigation pumps. Information pertaining to the companys
monthly direct labor usage is provided below:
Standard labor rate per hour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16
Standard hours allowed per radon mitigation pump . . . . . . . . . . . . . . . . . . . . . . . 0.5 hours
Actual pumps produced during the current month . . . . . . . . . . . . . . . . . . . . . . . . 9,000 units
Actual labor hours worked during the current month . . . . . . . . . . . . . . . . . . . . . . 3,600 hours
Actual labor cost for the current month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $64,800
a. Compute the companys labor rate variance.
b. Compute the companys labor efficiency variance.
c. An extremely large order of radon mitigation pumps was filled during the month for exportation to Saudi Arabia. Filling this order resulted in extended hours for many of the companys workers. Which labor variance reflects the extra hours worked by Marlos employees? Was their time well utilized? Explain.
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