Question

✓ A. Rate variance. $(4,225) F EX 22-8 Direct labor variances Obj. 3 The following data relate to labor cost for production of 20,000 cellular telephones: Actual: 8,450 hrs. at $22.50 Standard: 8,400 hrs. at $23.00 Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. B. Discuss what might have caused these variances. ce SHOW ME HOW V A Time variance 515,600) F EX 22-9 Direct labor variances Obj. 3,5 La Batre Bicycle Company manufactures commuter bicycles from recycled materials. The lowing data for July of the current year are available Quantity of direct labor used 5,050 hrs Actual rate for direct labor $16.80 per hr Bicycles completed in April 1.000 bicycles Standard direct labor per bicycle 5.4 hrs Standard rate for direct labor $16.00 perhe in the direct labor rate variance, direct labor time variance, and total direct variance. B. How much direct labor should be debited to Work in Process SHOW ME HOW

Answer 1

(A)

(1)

Labor rate variance = actual hours x (standard rate - actual rate)

= 8450 x ($23 - $22.50)

= $4225 Favorable

(2)

Labor efficiency variance = standard rate x (standard hours - actual hours)

= $23 x (8400 - 8450)

= $1150 Unfavorable

(3)

Total direct labor variance = (standard hours x standard rate) - (actual hours x actual rate)

= (8400 x $23) - (8450 x $22.50)

= $193200 - $190125

= $3075 Favorable

(B)

favorable labor rate variance is caused due to the lower rate per hour

Unfavorable labor efficiency variance is caused due to inefficient work performance by the labors resulting in more actual hours taken than standard.