Question

1. Direct Labor Variances

   Alpine Bicycle Company manufactures road bikes. The following data for September of the current year are available:

   Quantity of direct labor used	480 hrs.
   Actual rate for direct labor	$10.5 per hr.
   Bicycles completed in September	230
   Standard direct labor per bicycle	2 hrs.
   Standard rate for direct labor	$10.7 per hr.

   a. Determine the direct labor rate variance and direct labor time variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

   Rate variance	$
   Time variance	$
   Total direct labor cost variance	$

   b. How much direct labor should be debited to Work in Process?
   $______

Answer 1

Rate Variance = (SR-AR) * AH

= (10.7-10.5) * 480

= - 96 Favourable (minus sign)

Time variance = (SH - AH) *SR

= (2*230 - 480) * 10. 7

= 214 Unfavorable

Total Cost variance = 96F+214U

= 118 Unfavorable

B.

Direct labor debited to wip

= (230*2*10.7)

= 4922

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