Problem D: The finishing department of Mozart Company produced 25,000 units during November. The standard number of direct labor-hours per unit is two hours. The 3 standard rate per hour is $37.80. During the month, 51,250 direct labor-hours were worked at a cost of $1,742,500. 4 22 points Requirement: Compute the Labor Rate Variance, the Labor Efficiency Variance and the Total Labor Variance. Also indicate whether the variances are Favorable or 5 Unfavorable 6 7 7 AH . Actual Hours 8 8 SH Standard Hours 9 9 AR Actual Rate per hour (AR Actual labor cost in dollars/actual number of direct labor hours worked) 10 SR = Standard Rate per hour 11 11 12 12 Labor Rate Variance = (Actual Quantity * Actual Rate) - (Actual Quantity * Standard Rate) 13 14 AH AR AH SR 15 per hour per hour -- 17 X X X 19 Labor Rate Variance = (Make sure all variance amounts are positive) Labor Efficiency Variance =(Actual Quantity x Standard Rate) - (Standard Quantity x Standard Rate) 20 21 22 23 AH SR SH SR 24 per hour X per hour 25 26 27 28 29 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) Labor Rate Variance - Labor Efficiency Variance = Total Labor Variance = (Make sure all variance amounts are positive)