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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).

\$2.19

## 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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