Exercise 24.6 (Static) Computing Labor Cost Variances (LO24-1, LO24-3, LO24-5)

Margo Corporation produces air filtration systems. Information pertaining to the companys monthly direct labor usage is provided as follows.

Standard labor rate per hour	$	20
Standard hours allowed per filtration system		1.0	hours
Actual filtration systems produced during the current month		18,000	units
Actual labor hours worked during the current month		14,400	hours
Actual labor cost for the current month	$	331,200

a. Compute the companys labor rate variance.

b. Compute the company's labor efficiency variance. An extremely large order of air filtration systems was filled during the month for exportation to China. Filling this order resulted in extended hours for many of the companys workers. c-1. Which labor variance reflects the extra hours worked by Margos employees?

c-2. Was their time well utilized?