Overhead Doors, Inc., manufactures garage doors for homes. The standard quantity of direct labor to manufacture a
Question:
Overhead Doors, Inc., manufactures garage doors for homes. The standard quantity of direct labor to manufacture a door is 4.5 hours. The standard hourly wage in this department is $12.50 per hour. During August, 6,100 doors were produced. The payroll records indicate that 31,110 hours were worked at a total cost for payroll of $411,274.20.
Calculate the following, using the ‘‘goalpost'' diagram format shown in Figure to compute variances:
1. Labor rate variance.
2. Labor efficiency variance.
3. Net laborvariance.
Transcribed Image Text:
Materials Variances Actual coet (Actual quantity used x actual price per unit) Actual quantity used x Etandard price per unit Equivalent production x standard quantity per unit x standard price 11,000 lbs. × S3.80-$41.800 11,000 lbs. x $4.00-$44,000 10,000 units x 1 lb. x $4-$40,000 Materials Price Variance $2.200 F Materials Quantity Variance $4,000 U Net Materials Variance $1,800 U Labor Variances Actual hours (Actual hours worked x actual rate per hour) Actual hours worked x standard rate per hour Equivalent production x standard hours per unit × standard rate 4,500 hrs. x $11- $49,500 4,500 hrs. x $10-$45,000 10,000 units × 0 .5 hr. x S10-$50,000 Labar Rate Variance 54,500 U Labor Efficiency Variance $5,000 F Net Labor Variance $500 F
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