The Following Labour Standards Have Been Established for a Particular

question 120

Essay

The following labour standards have been established for a particular product:
$\begin{array}{|l|r|}\hline \text { Standard labour hours per unit of output } & 2.8 \text { hours } \\\hline \text { Standard labour rate } & \$ 11.50 \text { per hour } \\\hline\end{array}$
The following data pertain to operations concerning the product for the last month:
$\begin{array}{|l|r|}\hline \text { Actual hours worked } & 6,900 \text { hours } \\\hline \text { Actual total labour cost } & \$ 80,385 \\\hline \text { Actual output } & 2,300 \text { units } \\\hline\end{array}$
Required:
a)What was the labour rate variance for the month?
b)What was the labour efficiency variance for the month?

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Definitions:

Payables

Short-term liabilities of a company, representing amounts owed to suppliers or creditors for goods and services received but not yet paid for.

Control Accounts

General Ledger accounts that summarize the balances of numerous subsidiary accounts, used to consolidate and reconcile details.

Computerized Accounting System

An accounting system that utilizes software to record, store, and process financial transactions and data.

Month-end Postings

The journal entries made at the end of the month to record all transactions and adjustments for that month.