The standards for product A22G specify 8.2 direct labor-hours per unit at $11.90 per direct labor-hour. Last month 200 units of product A22G were produced using 1,700 direct labor-hours at a total direct labor wage cost of $20,060.Required:a. What was the labor rate variance for the month?b. What was the labor efficiency variance for the month?c. Prepare a journal entry to record direct labor costs during the month, including the direct labor variances.
What will be an ideal response?
a.
Labor rate variance = (AH × AR) - (AH × SR)
= $20,060 - (1,700 hours × $11.90)
= $20,060 - $20,230
= $170 F
b.
Labor efficiency variance = SR(AH - SH)
= $11.90 per hour × (1,700 hours - 1,640 hours*)
= $20,230 - $19,516
= $714 U
*8.2 hours × 200 units = 1,640 hours
c. Journal entry to record the direct labor costs:
| Work-in-process inventory | 19,516 | |
| Labor efficiency variance | 714 | |
| Labor rate variance | 170 | |
| Wages payable | 20,060 |
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