EXERCISE 10-15 (CONTINUED) ALTERNATIVE SOLUTION

4. a. Labor rate variance = (AH × AR) – (AH × SR) ($4,100) – (400 hours* × SR) = $500 U $4,100 – 400 hours × SR = $500** 400 hours × SR = $3,600 SR = $9.00 per hour * 10 workers × 40 hours per worker = 400 hours ** When used with the formula, an unfavorable variance is positive. b. The standard hours per batch can be obtained by working through the standard cost card for Maxitol. Standard cost per batch (given)... $99.50Less standard materials cost: Material A standard cost (6 gallons × $8.00 per gallon) ... $48.00 Material B standard cost (5 pounds × $4.00 per pound) ... 20.00 68.00Direct labor standard cost per batch... $31.50Direct labor standard cost per batch $31.50 per batchStandard rate per direct labor-hour = $9.00 per DLH= 3.5 DLHs per batch c. 120 batches × 3.5 hours per batch = 420 hours d. Labor efficiency variance = (AH × SR) – (SH × SR) (400 hours × $9.00 per hour) – (420 hours × $9.00 per hour) = $180 F e. Work in process (420 hours × $9.00 per hour) ... 3,780 Labor rate variance (400 hours × $1.25 per hour U) ... 500 Labor efficiency variance (20 hours F × $9.00 per hour)... 180Case 10-35 (continued)