Exercise 23-16 Computation and interpretation of labor variances LO P2 After evaluating Null Company's manufacturing...
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Exercise 23-16 Computation and interpretation of labor variances LO P2 After evaluating Null Company's manufacturing process, management decides to establish standards of 2 hours of direct labor per unit of product and $15.30 per hour for the labor rate. During October, the company uses 11,100 hours of direct labor at a $172,050 total cost to produce 5,900 units of product. In November, the company uses 22,300 hours of direct labor at a $347,880 total cost to produce 6,300 units of product. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate AQ - Actual Quantity SQ - Standard Quantity AP = Actual Price SP = Standard Price (1) Compute the direct labor rate variance, the direct labor efficiency variance, and the total direct labor cost varlance for each of these two months. Classify each variance as favorable or unfavorable. October Actual Cost Standard Cost AR AH SR SH SR 11,100 $15.50 11,100 $ 15.30 $ 16.30 $ 172.050 $ 169,830 S 2,220 S $ 2,220 (Unfavorable Direct labor rate variance Direct labor efficiency variance Total direct labor variance November Actual Cost Standard Cost S 0 S 0 $ OO
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