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ClassOf1 Standard Costing Labor Variances 14

# ClassOf1 Standard Costing Labor Variances 14

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Calculation of Labor Variances
Calculation of Labor Variances

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12/11/2012

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Sub: Accounts Topic: Standard Costing
www.classof1.com
*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submittingthe same in lieu of your academic submissions for grades.

ClassOf1  provides exert guidance for College, Graduate and High school  homework  and live online tutoring on subjects like Finance, Marketing , Statistics , Economics and others. Check out more solved problems in our  Solution Library .

Question:
Scheer Company's standard labor cost of producing one unit of product DD is 4 hours at therate of \$14.16 per hour. During August, 40,800 hours of labor are incurred at a cost of \$14.28per hour to produce 10,000 units of product DD.Compute the total labor variance.\$Compute the labor price and quantity variances.Labor Price Variance \$Labor Quantity Variance \$Repeat the previous question, assuming the standard is 4.2 hours of direct labor at \$14.46 perhour.Labor Price Variance \$Labor Quantity variance \$
Solution:
Actual Labor hours Spent DuringAugust 40800 AHActual LaborHourly Rate 14.28 ARStandard LaborHourly Rate 14.16 SRLabor rate variance = 4896 Un Favorable

Sub: Accounts Topic: Standard Costing
www.classof1.com
*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submittingthe same in lieu of your academic submissions for grades.

AH*( AR-SR)Standard Labor Hours Per Unit OProduct 4Standard Labor hours allowed Per Actual Production 10000*4 40000 SHActual Labor hours Spent DuringAugust 40800 AHStandard LaborHourly Rate 14.16 SRLabor Efficiency Variance = SR* (AH-SH) 11328 Un FavorableTotal Labor variance = ( Labor rate Variance + LaborEfficiency Variance) 16224 Un Favorable.AnswersTotal Labor variance = ( Labor rate Variance + LaborEfficiency Variance) 16224 Un Favorable.Labor Price variance 4896 Un Favorable.Labor quantityVariance 11328 Un FavorableRepeat the Previous Question, assuming 4.2 Hours standard labor hours per units of Product ,at\$14.46 Per Hour.Actual Labor hours Spent During August 40800 AHActual Labor HourlyRate 14.28 ARStandard LaborHourly Rate 14.46 SRLabor rate variance = AH*( AR-SR) -7344 FavorableStandard Labor Hours Per Unit Of Product 4.2Standard Labor hours allowed Per Actual Production10000*4.2 42000 SHActual Labor hours Spent During August 40800 AHStandard LaborHourly Rate 14.46Labor Efficiency Variance = SR* (AH-SH) -17352 FavorableTotal Labor variance = ( Labor rate Variance + Labor EfficiencyVariance) -24696 FavorableAnswTotal Labor variance = ( Labor rate Variance + Labor Efficiency 24696 Favorable