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direct labor, variable overhead price, efficiency variance

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The records of the Penney Company show the following for February:

Standard Labor hours allowed per unit of output 1.5
Standard variable overhead rate per
standard direct labor hour $30
Good units produced 60,000
Actual direct labor hours worked 92,000
Actual total direct labor $ 1,975,000
Direct labor efficiency variance $40,000 U
Actual variable overhead $2,560,000

REQUIRED:

Compute the direct labor and variable overhead price and efficiency variances.

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I created a diagram in excel so you have a ...

Solution Summary

I created a diagram in excel so you have a template for future work and so you have a visual that helps you to see the key to unlocking this puzzle (noticing the ratio of standard rates between VOH and labor). Computations are in cells (click to see).

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See Also This Related BrainMass Solution

Accounting Problems to find labor efficiency variance, direct labor cost, and variable overhead efficiency variance.

The following labor standards have been established for a particular product:

Standard Labor-hour per unit of output 8.0 hours
Standards labor rate $13.10 per hour

The following data pertain to operation concerning the product for the last month:

Actual hours worked 4,000 hours
Actual total cost $53,000
Actual output 400 units

What is the labor efficiency variance for the month?

A) $10,600 U
B) $11,080 U
C) $11,080 F
D) $10,480 U

The following information pertains to Bates Company's direct labor for March:

Standard direct labor-hours 21,000
Actual direct labor-hours 20,000
Favorable direct labor rate variance $8,400
Standard direct labor rate per hour $6.30

What was Bates' total direct labor cost for March?
A) $117,600
B) $118,000
C) $134,000
D) $134,400

The following standards for variable manufacturing overhead have been established for a company that makes only one product:

Standard hours unit of output 5.6 hours
Standard variable overhead rate $19.15 per hour

The following data pertain to operation for the last month:

Actual hours 5,100 hours
Actual total variable overhead cost $99,195
Actual output 1,100 units

What is the variable overhead efficiency variance for the month?
A) $20,299 F
B) $18,769 F
C) $1,8484 F
D) $20,617 F

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