Information regarding Maxwell’s direct labor cost for the month of January follo

Question

Information regarding Maxwell’s direct labor cost for the month of January follows:

Compute the standard direct labor wage rate per hour in January. (Round your final answer to two decimal places.)

2.

Compute the direct labor efficiency variance. (Round your standard direct labor rate per hour to two decimal places and your final answer to the nearest whole dollar amount.)

  Direct labor hourly rate paid $29.00   Total standard direct labor-hours for units produced this period 11,500   Direct labor-hours worked 11,300   Direct labor rate variance $16,500 favorable

Explanation / Answer

1. Direct labor rate variance = ( Standard hourly rate - Actual rate paid) x Actual hours worked = ( Standard hourly rate - $ 29) x 11.300 = $ 16,500

Or Standard direct labor wage rate per hour = $ 30.46

2. Direct labor efficiency variance = ( Standard hours for actual output - Actual hours worked ) x Standard rate per hour = ( 11,500 - 11,300) x 30.46 = $ 6,092 favorable

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