At ThermoTech, the standard quantity of labor is 18 hours per air conditioning unit. The standard wage rate is $30. In August, the company produced 120 air conditioning units and incurred 2,250 labor hours at a cost of $70,500. Calculate the labor rate variance and the labor efficiency variance. Indicate whether the variances are favorable or unfavorable.

At ThermoTech, the standard quantity of labor is 18 hours per air conditioning unit. The standard wage rate is $30. In August, the company produced 120 air conditioning units and incurred 2,250 labor hours at a cost of $70,500. Calculate the labor rate variance and the labor efficiency variance. Indicate whether the variances are favorable or unfavorable.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter10: Standard Costing And Variance Analysis

Section: Chapter Questions

Problem 58E: At the beginning of the year, Lopez Company had the following standard cost sheet for one of its...

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