Question

Under normal conditions, Sarah pays her employees $8.50 per hour, and it will take 2.8 hours of labor per pair of shoes. During August, Sole Purpose Shoe Company incurred actual direct labor costs of $66,066 for 7,260 hours of direct labor in the production of 2,200 pairs of shoes.

Get the direct labor variance.

Budget Performance Report Shaded cells have feedback. X Sarah has learned a lot from you over the past two months, and has compiled the following data for Sole Purpose Shoe Company for September using the techniques you taught her. She would like your help in preparing a Budget Performance Report for September. The company produced 3,500 pairs of shoes that required 12,250 units of material purchased at $8.20 per unit and 9,450 hours of labor at an hourly rate of $8.90 per hour during the month. Actual factory overhead during September was $27,300. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance. - Use the data in the following table to prepare the Budget Performance Report for Sole Purpose Shoe Company for September. Manufacturing Costs Standard Price Standard Quantity Standard Cost Per Unit Direct materials $8.40 per unit 3.6 units per pair $30.24 Direct labor $8.50 per hour 2.8 hours per pair 23.80 Factory overhead $2.60 per hour 2.8 hours per pair 7.28 Total standard cost per pair $61.32

Answer 1

Labor rate variance =Actual hours(Standard rate - Actual rate)
Labor efficiency variance =Standard Rate(Actual Hours - Standard Hours)
Direct labor variance =(Standard rate*Standard hours) - (Actual Rate*Actual hours)
Standard Rate per hour =$8.50 per hour
Standard Hours =2.80 hours*3,500 =9,800 hours
Actual Rate per hour =$8.90 per hour
Actual hours worked =9,450 hours
Labor rate variance =9,450 hours*($8.50 - $8.90) =$3,780(U)
Labor efficiency variance =$8.50*(9,450 - 9,800) =$2,975(F)
Direct labor variance =($8.50*9,800) - ($8.90*9,450) =$805(U)