During March 2020, Garner Tool & Die Company worked on four jobs. A review of the direct labour costs reveals the following summary data: Actual Standard Job Number Hours Costs Hours Costs Total Variance A257 220 $4,400 225 $4,500 $100 Favourable A258 450 9,450 430 8,600 850 Unfavourable A259 240 4,860 240 4,800 60 Unfavourable A260 115 2,070 110 2,200 130 Favourable Total variance $680 Unfavourable Analysis reveals that Job A257 was a repeat job. Job A258 was a rush order that required overtime work at premium rates of pay. Job A259 required a more experienced replacement worker on one shift. Work on Job A260 was done for one day by a new trainee when a regular worker was absent. Prepare a report for the plant supervisor on direct labour cost variances for March.

See explanation below

Explanation:

Given

Actual Standard

Job Number -- Hours-- Costs-- Hours --Costs --Total Variance

A257 -- 220 -- $4,400 -- 225 --$4,500 --$100 Favourable

A258 -- 450 -- 9,450 -- 430 -- 8,600 -- 850 Unfavourable

A259 -- 240 -- 4,860 -- 240 -- 4,800 -- 60 Unfavourable

A260 -- 115 -- 2,070 -- 110 -- 2,200 -- 130 Favourable

Total variance $680 Unfavourable

To solve this, well need to calculate the actual labor rate per hour for all four jobs, and standard labor rate per hour which will be same for all jobs.

This is calculated as follows; Rate = Hours ÷ Costs

The table becomes

Actual Standard

Job Number -- Hours -- Costs -- Rate -- Hours --Costs --- Rate ---Total Variance

A257 220 -- $4,400 -- --20225 --$4,500 20$100 Favourable

A258 -- 450 -- 9,450 21 430 -- 8,600 20-- 850 Unfavourable

A259 240 -- 4,860 20.25 240 -- 4,800 20--- 60 Unfavourable

A260 115 2,070 18 110 2,200 20 130 Favourable

Total variance $680 Unfavourable

The Direct Labor Variance Report for the Month Ended March 31, 2017, is prepared below

GARNER TOOL & DIE COMPANY

Direct Labor Variance Report

For the Month Ended March 31, 2017

Job NO: A257

Actual Hours(A): $220

Standard Hours(B): $225

Standard Rate(C ): $20

Quantity Variance[( A - B)*C]: ($100)

Description; favourable

Actual Rate(D): $20

Standard Rate(C ): $20

Actual Hours(A): $220

Price Variance[(D - C) *A]: $0

Description; none

Total variance: Price Variance + Quantity Variance = ($100)

Description: favorable

Job NO: A258

Actual Hours(A): $450

Standard Hours(B): $430

Standard Rate(C ): $20

Quantity Variance[( A - B)*C]: $180

Description; unfavourable

Actual Rate(D): $21

Standard Rate(C ): $20

Actual Hours(A): $450

Price Variance[(D - C) *A]: $450

Description; unfavourable

Total variance: Price Variance + Quantity Variance = $630

Description: unfavorable

Job NO: A259

Actual Hours(A): $240

Standard Hours(B): $240

Standard Rate(C ): $20

Quantity Variance[( A - B)*C]: $0

Description; none

Actual Rate(D): $22.25

Standard Rate(C ): $20

Actual Hours(A): $240

Price Variance[(D - C) *A]: $600

Description; unfavourable

Total variance: Price Variance + Quantity Variance = $600

Description: unfavorable

Job NO: A260

Actual Hours(A): $115

Standard Hours(B): $110

Standard Rate(C ): $20

Quantity Variance[( A - B)*C]: $100

Description; unfavourable

Actual Rate(D): $18

Standard Rate(C ): $20

Actual Hours(A): $115

Price Variance[(D - C) *A]: ($250)

Description; favourable

Total variance: Price Variance + Quantity Variance = ($150)

Description: favorable

For proper identification, some columns are tagged A,B,C and D.

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