Direct Labor Variances The following data relate to labor cost for production of 4,500 cellular telephones: Actual: 3,020 hrs. at $14.5 Standard: 2,970 hrs. at $14.7 a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost 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. The employees may have been less-experienced or poorly trained, thereby resulting in a labor rate than planned. The lower level of experience or training may have resulted in efficient performance. Thus, the actual time required was than standard.
Solution
Labor rate variance | $ 604.00 | Favourable-F | |
Labor Time variance | $ 735.00 | Unfavourable-U | |
Total Labor cost variance | $ 131.00 | Unfavourable-U |
Working
Labor Rate Variance | ||||||
( | Standard Rate | - | Actual Rate | ) | x | Actual Labor Hours |
( | $ 14.70 | - | $ 14.50 | ) | x | 3020 |
604 | ||||||
Variance | $ 604.00 | Favourable-F | ||||
Labour Time Variance | ||||||
( | Standard Hours | - | Actual Hours | ) | x | Standard Rate |
( | 2970 | - | 3020 | ) | x | $ 14.70 |
-735 | ||||||
Variance | $ 735.00 | Unfavourable-U | ||||
Labor Cost Variance | ||||||
( | Standard Cost | - | Actual Cost | ) | ||
( | $ 43,659.00 | - | $ 43,790.00 | ) | ||
-131 | ||||||
Variance | $ 131.00 | Unfavourable-U |
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