Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Hartley Company's standard labor cost per unit of output is $20.52 (1.8 hours times $11.40 per hour).
During August, the company incurs 2,100 hours of direct labor at an hourly cost of $10.90 per hour in making 1,200 units of the finished product.
We need to use the following formulas:
Direct labor price variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor price variance= (11.4 - 10.9)*2,100hours= $1,050 favorable
Direct labor quantity variance= (SQ - AQ)*standard rate
Direct labor quantity variance= (1,200 units*1.8 hours - 2,100)*11.4= $684 favorable
Total labor variance= Direct labor price variance - Direct labor quantity variance
Total labor variance= 1,050 + 684= $1,734 favorable
Another formula is:
Total labor variance= Estimated total cost - actual total cost
Total labor variance= (1.8*11.4*1,200) - (10.9*2,100)= $1,734 favorable
