Question: Harvey Inc. uses a standard cost system for labor. Standard costs for material cannot be used because customers require unique materials and all jobs are

Harvey Inc. uses a standard cost system for labor. Standard costs for material cannot be used because customers require unique materials and all jobs are different sizes. One of the company’s jobs experienced the following results related to direct labor in December 2010:

Actual hours worked ..........9,000

Standard hours for production .......8,600

Actual direct labor rate .........$9.65

Standard direct labor rate ........$9.85

a. Calculate the total actual payroll.

b. Determine the labor rate variance.

c. Determine the labor quantity variance.

d. What concerns do you have about the variances in (b) and (c)?

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a Total payroll 9000 965 86850 b LRV Actual payroll Standard cost for actual hours worked 86850 985 ... View full answer

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