Lewis Companys standard labor cost of producing one unit of

Lewis Company\'s standard labor cost of producing one unit of Product DD is 3.9 hours at the rate of $10.0 per hour. During August, 41,200 hours of labor are incurred at a cost of $10.20 per hour to produce 10,500 units of Product DD. Compute the total labor variance Total labor variance Compute the labor price and quantity variances Labor price variance Labor quantity variance Compute the labor price and quantity variances, assuming the standard is 4.2 hours of direct labor at $10.40 per hour. Labor price variance s Labor quantity variances

Solution

1a) Total labour variance = (10500*3.9*10)-(41200*10.20)= 10740 Unfavorable

1b) Labour price variance = (10-10.20)*41200 = 8240 Unfavorable

Labour quantity variance = (40950-41200)*10 = 2500 Unfavorbale

1c) Labour price variance = (10.40-10.20)*41200 = 8240 Favourable

Labour quantity variance = (44100-41200)*10.40 = 30160 Favorable

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