Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 32

Variable Cost Variances

The standard direct labor cost per reservation for Harry’s Hotel is $3 (= $12 per labor hour ÷ 4 reservations per hour). Actual direct labor costs during the period totaled $45,240. Also during the period, 3,000 labor-hours were worked, and 14,000 reservations were made.

Required

Compute the direct labor price and efficiency variances for the period. (Refer to Exhibit 17.7 for the format to use.)

Step 1 of 6

H Hotel makes reservation and standard labor cost per reservation is $3 which is $12 per hour. During the period the hotel made 14,000 reservations with the 3,000 labor hours and direct labor cost incurred was $45,240.