Question

What is Seaside's total labour variance? $20,000 F $20,000 U $112,500 F $120,000 U The Perfect Tool Company (South Australian Division) produced 80,000 saw blades during the year. It took 1.5 hours of labour per blade at a rate of $8.50 per hour. However, its standard labour rate is $8.00. Its labour efficiency variance was an unfavourable $40,000. 18. IA. IB. What is Perfect's standard hours allowed for a volume of 80,000 blades? 210,000 hours 189,000 hours 115,000 hours 125,000 hours 19. What is Perfect's labour rate variance? $57,500 U $57,500 F $60,000 U $60,000 F D. James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts using 2 hours of direct labour at a rate of $8.50 per hour. The materials and labour standards

Answer 1

Actual Hours = 1.5 per blade * 80,000 blades = 1,20,000 hours

Standard rate = $ 8.00

1. The formula for the labor efficiency variance is:

(Actual hours - Standard hours) x Standard rate = Labor efficiency variance

( 1,20,000 - Standard hours) x 8.00 = - 40,000

Standard Hours = (- 40,000/8) -1,20,000

Standard Hours = 1,25,000 hours

2. The formula for the labor Rate variance is

Labor rate variance = (Actual rate - Standard rate) x Actual hours worked

Labor rate variance = ( 8.50 -8.00) x 1,20,000

Labor rate variance = $ 60,000 F