After evaluating Null Companys manufacturing process managem

After evaluating Null Company\'s manufacturing process, management decides to establish standards of 3 hours of direct labor per unit of product and $16.60 per hour for the labor rate. During October, the company uses 21,000 hours of direct labor at a $352,800 total cost to produce 7,200 units of product. In November, the company uses 23,600 hours of direct labor at a $398,840 total cost to produce 7,600 units of product. (1) Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor cost variance for each of these two months October Standard Cost Actual Cost AH SR SH SR AH AR 0 o Unfavorable Direct labor rate variance Direct labor efficiency variance Total direct labor variance 0 Favorable avorable November Standard Cost Actual Cost AH SR SH SR AH AR 0 (Unfavorable 0 rUnfavorable Unfavorable Direct labor rate variance Direct labor efficiency variance otal direct labor variance

Solution

Calculate labour variance :

October
Actual cost				Standard cost
AH	*	AR		AH	*	SR		SH	*	SR
21000	*	16.80		21000	*	16.60		21600	*	16.60
			4200				9960
Direct labour rate variance	4200	Unfavourable
Direct labour efficiency variance	9960	Favourable
Total direct labour variance	5760	Favourable