Question

Direct Labor Variances La Batre Bicycle Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available: Quantity of direct labor used Actual rate for direct labor Bicycles completed in April Standard direct labor per bicycle Standard rate for direct labor 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 420 hrs $12.1 per hr. 200 bicycles 2 hrs. $12.3 per hr

Answer 1

La Batre Bycycle Company:

Direct labor rate variance = $ ( 12.1 - 12.3 ) x 420 = - $ 84 F

Direct labor time variance = ( 420 - 400) x $ 12.30 = $ 246 U

Direct labor cost variance = $ 246 U - $ 84 F = $ 162 U

Abbeville Fixture Company:

Direct material standard cost per unit = 2.1 lbs. x $ 10.25 = $ 21.525

Direct labor standard cost per unit = $ 12.00 x 15 / 60 = $ 3.00

Total standard cost per unit = $ 21.53 + $ 3.00 = $ 24.53

Direct materials price variance = $ ( 10.25 - 10.50 ) x 18,818 = $ 4,704.50 Unfavorable

Direct materials quantity variance = ( 8,700 x 2.1 lbs. - 18,818 lbs.) x $ 10.25 = $ 5,617 Unfavorable.

Total direct materials cost variance = $ 4,704.50 U + $ 5,617 U = $ 10,321.50 Unfavorable

Direct labor rate variance = $ ( 12.00 - 12.36 ) x 2,000 = $ 720 Unfavorable

Direct labor time variance = ( 8,700 x 0.25 - 2,000 ) x $ 12.00 = - $ 2,100 Favorable

Direct labor cost variance = $ 720 - $ 2,100 = - $ 1,380 Favorable