Labor Variance Formulas Total, Price, and Quantity

AH = Actual Hours AR = Actual Rate SH = Standard Hours SR = Standard Rate F = Favorable is when the actual is lower than the standard. U = Unfavorable is when the actual is higher than the standard. Standard Hours (SH) Formula Actual Units Produced X Hours required per unit Step 1 (4,550 X 3.9) Step 2 = 17,745 Note: Actual Hours, Actual Rate, and Standard Rate will all be given to you in the problem. Total Labor Variance Formula (AH X AR) - (SH X SR) (17,900 X $8.30) - (17,745 X $8.50) $148,570- $150,833 = $2,263 F Labor Price Variance Formula (AH X AR) - (AH X SR) (17,900 X $8.30) - (17,900 X $8.50) $148,570 - $152,150 = $3,580F Labor Quantity Variance Formula (AH X SR) - (SH X SR) (17,900 X $8.50) - (17,745 X $8.50) $152,150 - $150,833 = $1,317U

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Labor Variance Formulas Total, Price, and Quantity

How to Determine Amounts for Variance Formulas Exercise Example: Morrison Pet Supply Companys standard labor cost of producing one unit of Product- A is 3.9 hours at the rate of $8.50 per hour. During August, 17,900 hours of labor are incurred at a cost of $8.30 per hour to produce 4,550 units of Product-A. AH = 17,900 Actual Hours to produce 4,550 units of Product-A AR = $8.30 Actual Rate per labor hour SH = (4,550 units of Product-A produced X 3.9 hours per unit) equals 17,745 hours of Standard Hours used to produce 4,550 units of Product-A. SR = $8.50 Standard Rate per labor hour

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