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9 February, 12:48

If 10,600 units were completed using 32,000 direct labor hours costing $480,000, the direct labor standard is 3 hours of direct labor at $15.40 per hour, the direct labor rate variance and direct labor efficiency variance are:

Rate Efficiency

a. $12,720 F $3,000 F

b. $12,720 F $3,000 U

c. $12,800 F $3,080 F

d. $12,800 F $3,080 U

e $12,800 U $3,080 U

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  1. 9 February, 13:10
    0
    d. $12,800 F $3,080 U

    Explanation:

    The formula and the computation of the direct labor rate variance and direct labor efficiency variance are as follows

    Direct labor rate variance is

    = Actual hours * (Actual rate - standard rate)

    = 32,000 hours * ($480,000 : $32,000 - $15.40)

    = 32,000 hours * ($15 - $15.40)

    = 32,000 hours * $0.40

    = $12,800 Favorable

    And, the direct labor efficiency variance is

    = Standard rate * (Actual hours - standard hours)

    = $15.40 * (32,000 - 10,600 units * 3 hours)

    = $15.40 * (32,000 - $31,800)

    = $15.40 * 200 hours

    = $3,080 unfavorable

    The favorable variance is the variance at which the standard cost is high than actual cost and if the standard cost is lower than actual cost than it would lead to unfavorable variance and the same is shown above
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