The standard cost of product 5252 includes 1.90 hours of direct labor at $14.30 per hour. The predetermined overhead rate is $22.00 per direct labor hour. During July, the company incurred 4,000 hours of direct labor at an average rate of $14.60 per hour and $80,100 of manufacturing overhead costs. It produced 2,000 units.

(a) Compute the total, price, and quantity variances for labor.

(b) Compute the total overhead variance.

a) The total, price, and quantity variances for labor is $4,060 totally, $0.3 per direct labour, and 200 hours respectively

b) The total overhead variance is $36,100

Explanation:

The variance is the difference between actual figures and standard figures.

The actual hour taken for 1 unit in July is 2.0 hour, so the quantity variance for labor in per unit is 0.1 hour = 2.0 - 1.9; then the total quantity variance for 2,000 units produced in July is 200 hours = 0.1 x 2,000

The price variance for labor is $0.3 = $14.60 - $14.30

The total standard cost for labor in July is $54,340 = $14.3 x 1.9 hours x 2,000 units

The total actual cost for labor in July is $58,400 = $14.6 x 2.0 hours x 2,000 units

So the variance in total labor cost of July is $4,060 = $58,400 - $54,340

The standard overhead cost for 2,000 units is $44,000, while the actual overhead cost in July is $80,100. So the total overhead variance is $36,100