Question:

Hanson Lumber produces wooden picnic tables.

The company developed the following standard costs for each picnic table:

	Hours	Cost per Hour	Total Cost
Direct labour	1.5	$26.00	$39.00

The actual results for the year are:

Units produced	12,000
Direct labour hours used this year	16,800
Actual labour rate per hour	$28.00

Required:

Calculate the direct labour rate (also called price) and efficiency (also called usage) variances and use your solution to answer the following questions.

NOTE: Please enter all variances as positive numbers.

The amount of the direct labour rate variance, also called the direct labour price variance, is $____________.

Indicate if the direct labour rate variance is favourable (enter the letter F) or unfavourable (enter the letters UF).

The amount of the direct labour efficiency variance, also called the direct labour usage variance, is $____________.

Indicate if the direct labour efficiency variance is favourable (enter the letter F) or unfavourable (enter the letters UF).