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Oriole Family Instruments makes cellos. During the past year, the company made 6,630 cellos even though the budget planned for only 5,780. The company paid its workers an average of $15 per hour, which was $1 higher than the standard labor rate. The production manager budgets four direct labor hours per cello. During the year, a total of 24,840 direct labor hours were worked.
Required:
Calculate the direct labor rate and efficiency variances.

Respuesta :

akiran007

Answer:

Direct Labor rate Variance  $ 24840 Unfavorable

Labor Efficiency  Variance  $23520 favorable

Explanation:

Direct Labor rate Variance = Actual Hours * Actual Rate- Actual Hour * Standard Rate

Direct Labor rate Variance = 24840*15- 24840*14

                                                = 372600- 347760    

                                            = $ 24840 Unfavorable

Labor Efficiency  Variance =  Actual Hours * Standard Rate- Standard Hour * Standard Rate

Labor Efficiency  Variance =  24840*14- 4*6630*14

                                           =  24840*14- 26520*14

                                         = 347760 - 371280= $23520 favorable

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