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Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] A manufactured product has the following information for June. Standard Quantity and Cost 6 pounds @ $9 per pound 3 DLH@ $17 per DLH 3 DLH @ $11 per DLH Direct materials. Direct labor Overhead Units manufactured Actual Results 45,500 pounds @ $9.20 per pound 22,300 hours @ $17.50 per hour $ 254,300 7,500 units

Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] A manufactured product has the following information for June. Standard Quantity and Cost 6 pounds @ $9 per pound 3 DLH@ $17 per DLH 3 DLH @ $11 per DLH Direct materials. Direct labor Overhead Units manufactured Actual Results 45,500 pounds @ $9.20 per pound 22,300 hours @ $17.50 per hour $ 254,300 7,500 units

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] A manufactured product has the following information for June. Direct materials Direct labor Overhead Units manufactured Exercise 21-10 (Algo) Direct labor variances LO P3 Standard Quantity and Cost 6 pounds @ $9 per pound 3 DLH @ $17 per DLH 3 DLH @ $11 per DLH AH = Actual Hours SH = Standard Hours AR Actual Rate SR Standard Rate Actual Cost Actual Results 45,500 pounds @ $9.20 per pound 22,300 hours @ $17.50 per hour $ 254,300 Compute the (1) direct labor rate variance and (2) direct labor efficiency variance. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to 2 decimal places.) 7,500 units Standard Cost
Transcribed Image Text:Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] A manufactured product has the following information for June. Direct materials Direct labor Overhead Units manufactured Exercise 21-10 (Algo) Direct labor variances LO P3 Standard Quantity and Cost 6 pounds @ $9 per pound 3 DLH @ $17 per DLH 3 DLH @ $11 per DLH AH = Actual Hours SH = Standard Hours AR Actual Rate SR Standard Rate Actual Cost Actual Results 45,500 pounds @ $9.20 per pound 22,300 hours @ $17.50 per hour $ 254,300 Compute the (1) direct labor rate variance and (2) direct labor efficiency variance. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to 2 decimal places.) 7,500 units Standard Cost
Expert Solution
Step 1

Lets understand the basics.

Direct labor rate variance is a variance between the rate at which labor should be hired against the rate at which it is hired.

Direct labor rate variance  = (Standard rate per hour - Actual rate per hour ) * Actual hour worked 

Direct labor efficiency variance is a variance between the standard time that should be taken for work against the actual time taken.

Direct labor efficiency variance = (Standard hour for production - Actual hour worked) * Standard rate per hour 

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