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Glacier Bicycle Company manufactures commuter bicycles from recycled materials. The following data for October are available:...

Glacier Bicycle Company manufactures commuter bicycles from recycled materials. The following data for October are available:

Quantity of direct labor used	5,000 hrs.
Actual rate for direct labor	$22.75 per hr.
Bicycles completed in October	800 bicycles
Standard direct labor per bicycle	6.0 hrs.
Standard rate for direct labor	$24.00 per hr.

a. Determine for October 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.

Direct Labor Rate Variance	$	Favorable
Direct Labor Time Variance	$	Unfavorable
Total Direct Labor Cost Variance	$	Favorable

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

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a.Direct Labour Rate Variance = -$6,250 Favourable

Direct Labour Time Variance = $4,800 Unfavourable

Total Direct Labour Cost Variance = -$1,450 Favourable

b.Direct Labour debited to Work-in-Process = $115,200

Explanation (Calculations)

Direct Labour rate Variance = Actual Hours*(Actual Rate- Standard Rate)

= 5000*($22.75-$24)

= 5000*(-$1.25)

= -$6,250 Favourable

So, Direct Labour Rate Variance = -$6,250 Favourable

Direct Labour Time Variance = Standard Rate *(Actual Direct Labour hours-Standard Direct Labour Hours)

= $24*(5000-4800)

= $24*200

= $4,800 Unfavourable

So,Direct Labour Time Variance = $4,800 Unfavourable

Standard Direct Labour Hours = 800(bicycles completed) * 6hrs(per bicycle)

= 4800 hours

Total Direct Labour Cost Variance = Direct Labour Rate Variance + Direct Labour Time Variance

= -$6,250 (favourable) + $4,800 (Unfavourable)

= -$1,450 Favourable

So,Total Direct Labour Cost Variance = -$1,450 Favourable

b.Direct Labour Debited to Work in Process = Standard Direct Labour Hours*Standard Rate

= 4800 hours * $24

= $115,200

So,Direct Labour Debited to Work in Process = $115,200

Note-Given

Actual Hours

Standard Hours (800*6)

Actual Rate (per hour)

Standard Rate (per hour)

5000 hrs

4800 hrs

$22.75

$24.00

ekkarill92 answered 1 year ago

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