QUESTION 4 Not complete Points out of 6.00 PFlag question Direct Labor Variances
ID: 2528918 • Letter: Q
Question
QUESTION 4 Not complete Points out of 6.00 PFlag question Direct Labor Variances Assume that Nortel manufactures specialty electronic circuitry through a unique photoelectronic process. One of the primary products, Model ZX40, has a standard labor time of 0.5 hour and a standard labor rate of $12.50 per hour. During February, the following activities pertaining to direct labor for ZX40 were recorded: Direct labor hours used Direct labor cost 2,180 E1,000 Units of ZX40 manufactured 4700 (a) Determine the labor rate variance. (b) Determine the labor efficiency variance. c) Determine the total flexible budget labor cost variance.Explanation / Answer
Standard labour hours = 4,700 units * 0.5 hours = 2,350 hours
Standard labour time = 0.5 hours
Standard labour rate = $ 12.50 per hour
Standard direct labour cost = 2,350 * 12.50 = $ 29,375
Actual direct labour hours used = 2,180
Direct labour cost = $ 31,000
Units of ZX40 manufactured =4,700 units
Actual direct labour rate = $ 14.22 (31,000/2,180)
= 2,180 (12.50-14.22)
= 2,180 (-1.72)
= -3,750
= 12.50 (2,350 – 2,180)
= 12.50 170
= 2,125
= 29,375 – 31,000
= $ - 1,625
Proof:
Labour cost varience = labour rate varience + labour effiency varience
-1,625 = - 3,750 + 2,125
-1,625 = -1,625