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    crazyhorse Posts: 5, Reputation: 1
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    #1

    Jun 10, 2006, 07:56 PM
    accounting... help
    Need help with this also, followed are your and my answers...

    The Dorcas Company uses standard costing and has established the following direct material and direct labor standards for each unit of Steph:

    Direct materials 2 gallons at $4 a gallon
    Direct labor 0.5 hours at $8 per hour

    During September, the company made 6000 Stephs and incurred the following costs:

    Direct materials purchased 12,600 gallons at $4.10 per gallon
    Direct materials used 12,600 gallons
    Direct labor used 2,800 hours at $7.65 per hour

    b) What was the labor time variance for September?
    ________________________________________
    May 28, 2006, 06:24 AM
    CaptainForest


    b)
    labor time variance = Actual Rate x (Standard Rate – Actual Rate)
    = $7.65 x { (0.5x6,000) – 2,800 }
    = $7.65 x (3,000 – 2,800)
    = 1,530 hours F

    labor time variance = 1,530 hours F

    my answer is :::::::::::::::::::::::::::::::::::::

    Labor Price Variance – SR X(AH Worked – SH Worked)
    8 X (2800 – 3000)
    8 X 200 = 1600 Favorable

    let me know...
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Jun 10, 2006, 09:28 PM
    Your way seems to be it for Labor Efficiency Variance.

    There is nothing that I can find that's called Labor Price Variance, so I assumed you meant Labor Rate Variance.

    The formula you have used is for Labor Efficiency Variance.

    You have indeed calculated the correct Labor Efficiency Variance at 1,600 F
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