Calculate the labor price variance and the labor efficiency variance.

QUESTION

Calculate labor variances
Johnson, Inc., manufactures lead crystal glasses. The standard direct labor time is 0.3 hour per glass, at a price of $13 per hour. The actual results for the production of 6,900 glasses were 0.2 hour per glass, at a price of $10 per hour.
Requirement
1. Calculate the labor price variance and the labor efficiency variance.
Standard Labour For 6900 Glasses Standard Hours Standard Price Total 6900*0.3 = 2070 $13.00 $26,910.00 Actual Hours Actual Price Total 6900*0.2=1380 $10.00 $13,800.00 Labour Price Variance = (Actual price Standard Price)*Actual Hours Labour Price Variance

= ($10-$13)*1380 = $4140 favorable Labour Efficiency Variance = (Actual Hours Standard Hours)*Standard Rate Labour Efficiency Variance = (1380-2070)*$13 = 8970 favorable

ANSWER:

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