Question

The standard cost of product 5252 includes 1.90 hours of direct labor at $13.40 per hour. The predetermined overhead rate is $22.00 per direct labor hour. During July, the company incurred 4,000 hours of direct labor at an average rate of $13.70 per hour and $82,600 of manufacturing overhead costs. It produced 2,000 units.

(a) Compute the total, price, and quantity variances for labor.

Total labor variance =
Labor price variance =
Labor quantity variance =
(b) Compute the total overhead variance.

Total overhead variance =

Answer 1

Answer:

Total labor variance $3380 unfavorable

labor price variance = = $1200 unfavorable

labor quantity variance   = $2680 unfavorable

total overhead variance = $1000 favorable

Explanation:

Total labor variance = standard cost -  actual cost

                                 = 2000*1.90*13.40 - 4000*13.70

                                 = $3380 unfavorable

labor price variance = (standard cost/hour -actual cost/hour) *actual hours

                              = (13.40 -13.70) *4000

                              = $1200 unfavorable

labor quantity variance  = (standard hour - actual hour) * standard rate per hour

                                       = (2000*1.90 - 4000) *$13.40

                                        = $2680 unfavorable

b) total overhead variance = 2000*1.9*22 - 82600

                                            = $1000 favorable