Question

1a)

The standard cost card of a particular product specifies that it requires 3.0 direct labor-hours at $10.20 per direct labor-hour. During March, 4,000 units of the product were produced and direct labor wages of $120,750 were incurred. A total of 15,000 direct labor-hours were worked. The direct labor variances for the month were:

	Labor Rate Variance	Labor Efficiency Variance
A)	$1,650 F	$28,124 U
B)	$1,650 F	$30,600 U
C)	$32,250 F	$28,124 U
D)	$32,250 F	$30,600 U

Option A

Option B

Option C

Option D

1b)

Fruchter Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below:

		Hours
Move time		26.7
Wait time		1.9
Queue time		0.3
Process time		3.9
Inspection time		10.9

The throughput time was:

rev: 08_01_2016_QC_CS-56553

37.6 hours

43.7 hours

41.8 hours

6.1 hours

Answer 1

Labor Rate Variance = 120750-(15000*10.20)= $32,250 F

Labor Efficiency Variance = 10.20*(15000-4000*3)= $30,600 U

Option D $32,250 F and $30,600 U is correct

1b

Throughput time = Move time +Queue time +Process time +Inspection time

Throughput time = 26.7+0.3+3.9+10.9= 41.8 hours

Option 3 41.8 hours is correct