Based on the information available, we can calculate the following for Death Valley Bicycle company:-
a.) Direct Labor Rate variance
Direct labor rate variance = (Actual Rate - Standard Rate) * Actual Hours worked
Direct Labor rate variance = ($18.50 - $19) * 1100
Direct Labor Rate variance = $0.5 * 1100
Direct Labor Rate variance = $550
Because the actual rate of direct labor is lesser than the standard rate of direct labor, there is a favorable variance.
Hence, Direct Labor Rate variance = $550 Favorable.
b.) Direct labor time variance
Direct Labor time variance = (Actual Hours - Standard hours) * Standard Rate per hour
Standard hours for actual output = 3 hours * 350 units = 1,050 hours
Direct Labor time variance = (1,100 hours - 1,050 hours) * 19 per hour
Direct Labor time variance = 50 hours * 19 per hour
Direct Labor time variance = $950
Because the actual hours spent is higher than the standard hours allowed, there is an unfavorable time variance.
Direct Labor time variance = $950 Unfavorable.
E13-24 Direct labor variances Death Valley Bicycle Company manufactures mountain bikes. The following data for Octo-...
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