After evaluating Null Company’s manufacturing process, management decides to establish standards of 3 hours of direct labor...

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Accounting

After evaluating Null Company’s manufacturing process,management decides to establish standards of 3 hours of directlabor per unit of product and $15 per hour for the labor rate.During October, the company uses 16,250 hours of direct labor at a$247,000 total cost to produce 5,600 units of product. In November,the company uses 22,000 hours of direct labor at a $335,500 totalcost to produce 6,000 units of product.
1.Compute the direct labor rate variance, the direct laborefficiency variance, and the total direct labor cost variance foreach of these two months.
2.Interpret the October direct labor variances.

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Question 1 October November Direct labor rate variance 3250 U 5500 U Direct labor efficiency variance 8250 F 60000 U Total direct labor cost variance 5000 F 65500 U Explanation For October Month 1 Direct labor rate variance Standard rate Actual rate Actual labor hours Standard rate is given 15 Actual rate 247000 16250 1520 Actual labor hours 16250 Now lets put these value in the above given formula Direct labor rate variance 15 1520 16250 3250 Unfavourable 2 Direct labor efficiency variance Standard hours See Answer

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After evaluating Null Company’s manufacturing process,management decides to establish standards of 3 hours of directlabor per unit of product and $15 per hour for the labor rate.During October, the company uses 16,250 hours of direct labor at a$247,000 total cost to produce 5,600 units of product. In November,the company uses 22,000 hours of direct labor at a $335,500 totalcost to produce 6,000 units of product.1.Compute the direct labor rate variance, the direct laborefficiency variance, and the total direct labor cost variance foreach of these two months.2.Interpret the October direct labor variances.