The standard cost of product 2525 includes 1.83 hours of direct labor at $13.90 per hour. The predetermined overhead rate is $20.60 per direct labor hour. During July, the company incurred 4,260 hours of direct labor at an average rate of $14.60 per hour and $69,276 of manufacturing overhead costs. It produced 1,900 units. (a) Compute the total, price, and quantity variances for labor. Total labor variance $ unfavorable Labor price variance $ unfavorable Labor quantity variance $ unfavorable (b) Compute the total overhead variance. $ favorable
Question: The standard cost of product 2525 includes 1.83 hours of direct labor at $13.90 per hour. The predetermined overhead rate is $20.60 per direct labor hour. During July, the company incurred 4,260 hours of direct labor at an average rate of $14.60 per hour and $69,276 of manufacturing overhead costs. It produced 1,900 units. (a) Compute the total, price, and quantity variances for labor. Solution: Computation of the Labor Variance Total labor variance $ unfavorable Total labor variance = Act Hours*Act Price - Std Hours * Std Price Total labor variance = (69,276)- (1900*1.83*13.90) Total labor variance = 20945.70 Unfav Labor price variance $ unfavorable Labor price variance = Act Hours (Act Price - Std Price) Labor price variance = 4260 (16.27 - 13.90) Labor price variance = 10062 Labor price variance = 10062 Unfav Labor quantity variance $ unfavorable Labor Quantity variance = (Act Hours - Std Hours)* Std Price Labor Quantity variance = (4260 - 3477)* 13.90 Labor Quantity variance = 10883.70 Labor Quantity variance = 10883.70 Unfav (b) Compute the total overhead variance. $ favorable Total overhead variance = Actual overhead - Standard Overhead Total overhead variance = 69,276 - 20.60*3477 Total overhead variance = 69,276 - 71626.2 Total overhead variance = 2350.2 fav Question: The standard cost of product 2525 includes 1.83 hours of direct labor at $13.90 per hour. The predetermined overhead rate is $20.60 per direct labor hour. During July, the company incurred 4,260 hours of direct labor at an average rate of $14.60 per hour and $69,276 of manufacturing overhead costs. It produced 1,900 units. (a) Compute the total, price, and quantity variances for labor. Solution: Computation of the Labor Variance Total labor variance $ unfavorable Total labor variance = Act Hours*Act Price - Std Hours * Std Price Total labor variance = (69,276)- (1900*1.83*13.90) Total labor variance = 20945.70 Unfav Labor price variance $ unfavorable Labor price variance = Act Hours (Act Price - Std Price) Labor price variance = 4260 (16.27 - 13.90) Labor price variance = 10062 Labor price variance = 10062 Unfav Labor quantity variance $ unfavorable Labor Quantity variance = (Act Hours - Std Hours)* Std Price Labor Quantity variance = (4260 - 3477)* 13.90 Labor Quantity variance = 10883.70 Labor Quantity variance = 10883.70 Unfav (b) Compute the total overhead variance. $ favorable Total overhead variance = Actual overhead - Standard Overhead Total overhead variance = 69,276 - 20.60*3477 Total overhead variance = 69,276 - 71626.2 Total overhead variance = 2350.2 fav
