Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 30 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 960 oil changes. Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June: Actual number of oil changes performed: 960 Actual number of direct labor hours worked: 474 hours Actual rate paid per direct labor hour: $14.50 Standard rate per direct labor hour: $13.50
Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 30 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 960 oil changes. Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June: Actual number of oil changes performed: 960 Actual number of direct labor hours worked: 474 hours Actual rate paid per direct labor hour: $14.50 Standard rate per direct labor hour: $13.50
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance
Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 30 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 960 oil changes.
Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June:
Actual number of oil changes performed: 960
Actual number of direct labor hours worked: 474 hours
Actual rate paid per direct labor hour: $14.50
Standard rate per direct labor hour: $13.50
Transcribed Image Text:Required:
1. Calculate the direct labor rate variance (LRv) and the direct labor efficiency variance (LEV) for June using
the formula approach.
Direct labor rate variance (LRV)
Direct labor efficiency variance (LEV) $
2. Calculate the direct labor rate variance (LRV) and the direct labor efficiency variance (LEV) for June.
Direct labor rate variance (LRV)
Direct labor efficiency variance (LEV) $
3. Calculate the total direct labor variance for oil changes for June.
4. What if the actual wage rate paid in June was $12.50? What impact would that have had on the direct labor
rate variance (LRV)? On the direct labor efficiency variance (LEV)? Indicate what the new variances would be
below. If required, round your answers to the nearest cent.
Direct labor rate variance (LRV):
Direct labor efficiency variance (LEV):
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