Direct Labor Variances Bellingham Company produces a product that requires 4 standard direct labor hours per...
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Direct Labor Variances
Bellingham Company produces a product that requires 4 standard direct labor hours per unit at a standard hourly rate of $20 per hour. If 15,000 units used 61,800 hours at an hourly rate of $19.85 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
a. Direct labor rate variance $ b. Direct labor time variance $ c. Direct labor cost variance $
Homework Answers
Labor Rate variance = (SR-AR) * AH
= (20-19.85)*61,800
= -9270 Favourable
Labor time variance = (SH-AH) *SR
= (15000*4 - 61800)*20
= 36,000 Unfavorable
Labor cost variance = 9270F + 36000 U
= 26,730 Unfavorable
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