Direct labor variance La Batre Bicycle company manufactures commuter bicycles from recycled materials. The following data...

Direct labor variance

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 760 hr

Actual rate for direct labor. $11.2 per hr.

Bicycles completed in April. 360 bicycles

Standard direct labor per bicycle. 2 hrs.

standard rate for direct labor. $11.4 per hr.

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 unfavaroable variance as a positive number:

direct labor rate variance. $. Favorable/unfavorable

direct labor time variance. $. Favorable/Unfavorable

total direct labor Cost Variance. $. Favorable/Unfavorable

b. How much direct labor should be debited to work in process?

Solutions

Expert Solution

All working forms part of the answer
Workings

Actual DATA for		360	units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct labor	760	$ 11.20	$ 8,512.00

Standard DATA for		360	units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct labor	( 2 hrs x 360 units)=720 hrs	$ 11.40	$ 8,208.00

Answers

--Requirement ‘a’

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$ 11.40	-	$ 11.20	)	x	760
	152
	Variance		$ 152.00			Favourable-F

Labour TIME Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	720	-	760	)	x	$ 11.40
	-456
	Variance		$ 456.00			Unfavourable-U

Labor Cost Variance
(	Standard Cost	-	Actual Cost	)
(	$ 8,208.00	-	$ 8,512.00	)
	-304
	Variance		$ 304.00			Unfavourable-U

--Requirement ‘b’

Direct Labor that is to be debited to Work in Process = Standard direct labor cost = $ 8,208 [see working]

ekkarill92 answered 1 year ago

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