Bateh Company produces hot sauce. The following information is provided concerning its standard cost system for the year:Standard Data Actual Data Material1/8 lbs. @ $7.50 per lb.Produced4,400 Labor24 mins. @ $12 per hr.Materials cost$7.40 per poundBudgeted fixed overhead$28,350Materials used556 poundsBudgeted variable overhead$4.50 per unitLabor worked1,610 hrs. totaling $19,481Budgeted production4,500Actual overheadFixed $20,000; Variable: $28,400 How much is the labor quantity variance?

Question
Asked May 10, 2019

Bateh Company produces hot sauce. The following information is provided concerning its standard cost system for the year:

Standard Data

 

Actual Data

 

Material

1/8 lbs. @ $7.50 per lb.

Produced

4,400

 

Labor

24 mins. @ $12 per hr.

Materials cost

$7.40 per pound

Budgeted fixed overhead

$28,350

Materials used

556 pounds

Budgeted variable overhead

$4.50 per unit

Labor worked

1,610 hrs. totaling $19,481

Budgeted production

4,500

Actual overhead

Fixed $20,000; Variable: $28,400

 

How much is the labor quantity variance?

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Expert Answer

Step 1

The labor quantity variance helps in determining the areas of production process that used more labor hours than the anticipated labor hours. It is calculated by multiplying standard labor rate with the difference between standard hours and actual hours.

Step 2

 Standard Hours = Unit produced × Standard hour per unit

                                      = 4400 × (24 / 60)

                                    = 4400 × 0.4

                                     = 1760 hrs.

Given:

Actual hours = 1610

Standard rate = $12.00

Formula to calculate labor price variance:

 Labor quantity variance = Standard rate (Standard hours – Actual hours)                                       &n...

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