Need solution will rate 1 Need solution will rate 1 1 1 2 3

ny has determined that the standard for labor is 2 hours per unit at $10 per hour. If a process A compa produces 1000 units and uses 1 hour per unit at $9 pe r hour, the labor efficiency variance is Select one: a. $10,000 unfavorable b.$10,000 favorable c.$12.000 unfavorable d. $12.000 favorable O

Solution

Question no:1 Answer is Option (b) $10,000 Favorable Labour Efficiency Variance = Actual Hours * Standard rate Per hour   - (Standard hours * Standard rate per hour) Labour efficiency Variance = (1000*1hr *$10) - (1000*2hr*$10) =$10,000 - $20,000 =$10,000 Favorable Question no:2 Answer is Option (b) $12 The Over head application rate per setup = Total setup Overhead cost /number of setups =$120,000/10,000 =$12 Question no:3 Answer is option (a) $8000 favorable Material Quantiy variance = (Actual Quantiy used * Standard rate )- (Standard Quantiy * Standard rate ) Actual Quantiy used =2000 Units * 9ft =18000 ft Standard quantiy = 2000*10ft =20,000 ft material Quanity variance =(18000*$4) - (20000*$4) =$8000 favorable