Japan Company produces lamps that require 2 standard hours per unit at a standard hourly rate...

Japan Company produces lamps that require 2 standard hours per unit at a standard hourly rate of $17.20 per hour. Production of 5,500 units required 10,780 hours at an hourly rate of $16.70 per hour.

What is the direct labor (a) rate variance, (b) time variance, and (c) total cost variance? Enter favorable variances as negative numbers.

a. Direct labor rate variance $ Unfavorable

b. Direct labor time variance $ Unfavorable

c. Total direct labor cost variance $ Unfavorable

Expert Solution

Answer

(a) Direct labor rate variance = $5,390, Favorable
(b) Direct labor time variance = $3,784 Favorable
(c) Total direct labor cost variance = $9,174 Favorable

Explanation:

(a) Direct labor rate variance

Direct labor rate variance = (Standard Rate - Actual Rate) × Actual Hours
=($17.20- $16.70) × 10,780 hours
= $5,390, Favorable

(b) Direct labor time variance

Direct labor time variance = (Standard Hours - Actual Hours) × Standard Rate
= [(5500*2) hours - 10,780 hours] × $17.20
= $3,784 Favourable

(c) Total direct labor cost variance

Total direct labor cost variance = rate variance + time variance

= $5,390, Favorable + $3,784 Favourable

= $9,174 Favorable

ekkarill92 answered 1 year ago

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