Munozs Doll Company produces handmade dolls. The standard amount of time spent on each doll is 1.50 hours. The standard cost of labor is $7.78 per hour. The company planned to make 7,700 dolls during the year but actually used 12,150 hours of labor to make 8,500 dolls. The payroll amounted to $97,443.

Should labor variances be based on the planned volume of 7,700 dolls or the actual volume of 8,500 dolls?

Prepare a table that shows the standard labor price, the actual labor price, the standard labor hours, and the actual labor hours.

Compute the labor price variance and indicate whether it is favorable (F) or unfavorable (U).

Compute the labor usage variance and indicate whether it is favorable (F) or unfavorable (U).