The Clinton Company uses a standard costing system. In August, 5,630 actual labo
ID: 2577418 • Letter: T
Question
The Clinton Company uses a standard costing system. In August, 5,630 actual labor hours were worked at a rate of $12.50 per hour. The standard number of hours is 5,060 and the standard wage rate is $12.90 per hour Determine the Labor Rate and Variance Labor Efficiency Variance. (Enter all variances as a positive number.) Labor Rate Variance Labor Efficiency Variance SHOW LIST OF ACCOUNT LINK TO TEXT Record the related journal entry to record labor cost. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanatior Debit Credit (To record labor cost)Explanation / Answer
Answer:- Labor Rate variance = (Standard rate – Actual rate) * Actual payment hour
= ($12.9 per hour - $12.5 per hour)*5630 hours
= $2252 Favourable
Labor Efficiency variance = (Standard hours- Actual hours)*Standard rate per hour
=(5060 hours – 5630 hours)*$12.90 per hour
= $7353 Unfavourable
Labor cost variance = Standard Cost – Actual cost
=(5060 hours*$12.90 per hour)-(5630 hours*$12.5 per hour)
= $65274-$70375
= $5101 Unfavourable
Labor cost variance = Labor Rate variance+ Labor Efficiency variance
$5101 Unfavourable= $2252 Favourable+$7353 Unfavourable
Journal Entry to record labor cost Account title Debit Credit $ $ Inventory Finished goods 65274 Direct Labor Efficiency Variance 7353 Direct Labor Rate Variance 2252 Wages Payable 70375