Question

Mandy Company has the following information from last month:

Standard direct labor hours allowed for units produced (SQ)	3,600
Actual direct labor hours worked (AQ)	3,480
Direct labor efficiency variance, favorable (F)	$ 5,760
Total payroll	$ 187,920

1.) What was Mandy's direct labor rate variance for the month, rounded to the nearest dollar?

2.) What was Mandy's actual direct labor rate per hour (AP), rounded to two decimal places?

Answer 1

Standard time = 3,600 hours

Actual time = 3,480 hours

Direct labor efficiency variance = $5,760

Actual labor cost = $187,920

Direct labor efficiency variance = Standard rate x (Standard time - Actual time )

5,760 = Standard rate x (3,600 - 3,480)

Standard rate = 5,760/120

= $48 per hour

2.

Actual rate per hour = Actual labor cost/Actual labor hours worked

= 187,920/3,480

= $54

1.

Direct labor rate variance = Actual time x (Standard rate - Actual rate)

= 3,480 x (48 - 54)

= $20,880 (Unfavorable)

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