Problem C:Martin Company makes plastic garbage bags. One box of bags requires one hour of direct labor at an hourly rate of $6. The company produced 200,000 boxes of bags using 208,000 hours of direct labor at a total cost of $1,144,000. Requirement: Compute the Labor Rate Variance, the Labor Efficiency Variance and the Total Labor Variance. Also indicate whether the variances are Favorable or Unfavorable 22 points AH SH AR SR Actual Hours Standard Hours Actual Rate per hour Standard Rate per hour (Hint: AR = Actual cost/Actual Direct labor hours) Labor Rate Variance = (Actual Qty * Actual Rate) - (Actual Qty * Standard Rate) AH AR AH SR per hour X per hour Labor Rate Variance - (Make sure all variance amounts are positive) Labor Efficiency Variance = (Actual Quantity x Standard Rate) - (Standard Quantityx Standard Rate) AH SR SH SR X per hour per hour Labor Efficiency Variance = (Make sure all variance amounts are positive) Total Labor Variance = Labor Rate Variance + or - Labor Efficiency Variance (Hint: If both Variances are Favorable or Unfavorable then you add them together and the Total Variance will be Favorable or Unfavorable.) (If one is Favorable and the other is Unfavorable you will subtract the 2 and the Total Variance will take on the Favorable or Unfavorable trait of the largest variance) 31 32 33 34 35 36 37 38 Total Labor Variance = Labor Rate Variance + or -Labor Efficiency Variance (Hint: If both Variances are favorable or Unfavorable then you add them together and the Total Variance will be Favorable or Unfavorable.) (If one is Favorable and the other is Unfavorable you will subtract the 2 and the Total Variance will take on the Favorable or Unfavorable trait of the largest variance) Formula Bar Labor Rate Variance Labor Efficiency Variance = Total Labor Variance - (Make sure all variance amounts are positive)