Direct Labor Variances La Batre Bicycle Company manufactures commuter bicycles from recycled materials. The following data...

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	550 hrs.
Actual rate for direct labor	$13.4 per hr.
Bicycles completed in April	260 bicycles
Standard direct labor per bicycle	2 hrs.
Standard rate for direct labor	$13.7 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 unfavorable variance as a positive number.

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

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

Solutions

Expert Solution

Ans: a.

1. Direct labor rate variance= (Actual labor rate per hour-standard rate per hour)*quantity of direct labor used

= ($13.4-$13.7)*550=-$165 “Favorable”

2. Direct Labor time variance

= ( quantity of direct labor actually used- standard direct labor allowed for 260 bicycles)*standard labor rate per hour

= (550-260*2)*$13.7

= $411”Unfaborable”

3. Total direct labor cost variance= Direct labor rate variance+ Direct labor time variance

= -$165+$411

= $246 “unfavorable”

b. Direct labor debited to work in process= standard direct labor allowed*standard labor rate per hour

= 520*$13.7=$7124

ekkarill92 answered 11 months ago

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