Homework SourseThe Geurtz Company uses standard costing The company makes a
The Geurtz Company uses standard costing. The company makes and sells a single product called a Roff. The following data are for the month of August:
The labor rate variance was:
| • | Actual cost of direct material purchased and used: $82,680 |
| • | Material price variance: $3,180 unfavorable |
| • | Total materials variance: $21,180 unfavorable |
| • | Standard cost per pound of material: $5 |
| • | Standard cost per direct labor-hour: $5 |
| • | Actual direct labor-hours: 11,700 hours |
| • | Labor efficiency variance: $3,000 favorable |
| • | Standard number of direct labor-hours per unit of Roff: 3 hours |
| • | Total labor variance: $5,190 unfavorable |
Solution
Total labor variance = Labor efficiency variance + Labor rate variance
$ 5190 U = $3000 F + Labor rate variance
Labor rate variance = ( $5190 + $3000) U
= $ 8190 Unfavourable
Labor rate variance = AH (AR ? SR)
8190 U = 11700 hours * (AR - $5)
0.70 U = (AR - $5)
AR = $ 5.70
