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The following computations of March labor variances for Sams Supply Company are incomplete. The missing items are labeled (a) through (d).
Labor rate variance = 4,800 hours * [(a) $8.50] = $350 favorable
Labor efficiency variance = (b) * [(c) 5,000 hours] = $(d)
1. Is (a) the standard rate or the actual rate?
2. Is 8.50 the standard rate or actual rate??
Is a 8.43 or 8.57?
I have seen:
4800(a - 8.50) = 350
4800a - 40800 = 350
4800a = 41150
4800(a - 8.50) = 350
4800a - 40800 = 350
4800a = 41150
a = 8.5729
and I have seen
Labor rate variance = 4,800 hours x [(a) $8.50] = $350 - $350 / 4,800 = [(a) $8.50] (a) = $8.43
which is correct, and why??
Thank you for your time.
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