Computing Labor Rate and Efficiency Variances
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6. The following labor standards have been established for a particular product:
Standard labor hours per unit of output......0.3 hours
Standard labor rate..................................$15.50 per hour
The following data pertain to operations concerning the product for the last month:
Actual hours worked.........3800
Actual total labor cost.....$59,470
Actual output.......... 12,800 units
Required: a. What is the labor rate variance for the month? b. What is the labor efficiency variance for the month
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Solution Summary
This solution illustrates how to compute a labor rate and labor efficiency variances.
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a. What is the labor rate variance for the month?
Actual rate per hour = Actual total labor cost/Actual hours worked
Actual rate per hour = $59,470/3,800
Actual rate per hour = $15.65
Labor rate variance = (Actual hours*actual rate per hour) -(Actual hours*Standard rate per hour)
Labor ...
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