EXERCISE 10-12 (CONTINUED)

2. Actual Hours of Standard Hours Allowed for Output, at Input, at the Actual Rate Actual Hours of Input, at the Standard Ratethe Standard Rate (AH × AR) (AH × SR) (SH × SR) 750 hours × $12.00 per hour 800 hours* × $12.00 per hour $10,425 = $9,000 = $9,600 ↑ ↑ ↑Rate Variance, $1,425 U Efficiency Variance, $600 F Total Variance, $825 U *4,000 units × 0.2 hours per unit = 800 hours Alternatively: Labor rate variance = AH (AR – SR) 750 hours ($13.90 per hour* – $12.00 per hour) = $1,425 U *10,425 ÷ 750 hours = $13.90 per hour Labor efficiency variance = SR (AH – SH) $12.00 per hour (750 hours – 800 hours) = $600 F