notes 3 - E12: Labor Variances The easiest way to solve...

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E12: Labor Variances The easiest way to solve this problem is to use the general model for variance analysis and fill in the missing pieces. AH × AR (Actual hours of input × Actual rate) 110,000 hours × $4.25 = $467,500 AH × SR (Actual hours of input × Standard rate) 110,000 hours × $4.20 = $462,000 SHA × SR (Standard hours allowed for actual output × Standard rate) 100,000 hours × $4.20 = $420,000 Labor rate variance 110,000 hours × ($4.25 – $4.20) = $5,500 U Labor efficiency variance $4.20 × (110,000 hours – 100,000 hours) = $42,000 U
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Total direct labor variance: $47,500 U a. Standard labor hours allowed for output (100,000 hours): The standard direct labor hours allowed for output is computed by multiplying units produced (50,000) times standard hours allowed per unit (2). b. Actual labor cost per hour ($4.25 per hour): This is total actual direct labor costs of $467,500 divided by total actual direct labor hours incurred (110,000). c.
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This note was uploaded on 08/18/2009 for the course ACCT abac2896 taught by Professor Mr.manners during the Spring '09 term at Abraham Baldwin Agricultural College.

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notes 3 - E12: Labor Variances The easiest way to solve...

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