Calculate the direct labor rate variance
Willow Inc. has provided the following information:
| Standards: | Per unit | ||
| Direct materials | 10 lb @ $3.60/lb | $ | 36.00 |
| Direct labor | 2 hours @ $24.50/hour | 49.00 | |
| Variable overhead | 2 hours @ $18/hour | 36.00 | |
| Fixed overhead | 20.00 | ||
| Total | $ | 141.00 | |
Budgeted production = 7,400 units
| Actual results | ||||
| Materials | 76,460 | lbs | $ | 273,451 |
| Direct labor | 14,450 | actual hours | $ | 345,230 |
| Variable overhead | $ | 266,640 | ||
| Fixed overhead | $ | 144,870 | ||
| Units produced | 7,500 | units | ||
a. Calculate the direct materials price variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting “Favorable”, “Unfavorable”, or “None” for no effect (i.e., zero variance).)
c. Calculate the direct labor rate variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting “Favorable”, “Unfavorable”, or “None” for no effect (i.e., zero variance).)
e. Calculate the variable overhead rate variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting “Favorable”, “Unfavorable”, or “None” for no effect (i.e., zero variance).)
f. Calculate the variable overhead efficiency variance. (Indicate the effect of variance by selecting “Favorable”, “Unfavorable”, or “None” for no effect (i.e., zero variance).)
Solution:
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