The following data relate to labor cost for production of 7,100 cellular telepho

Question

The following data relate to labor cost for production of 7,100 cellular telephones: 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. The employees may have been less experienced or poorly trained, thereby resulting in a labor rate than planned. The lower level of experience or training may have resulted in efficient performance. Thus, the actual time required was than standard.

Explanation / Answer

a Labor cost Variance Details Labor Hrs Labor Rate /Hr Total Labor cost Standard Labor cost details                4,820                      13.60         65,552.00 Actual Labor cost details                4,740                      14.00         66,360.00 Total Labor cost variance                     808 Direct Labor Rate Variance= Actual Hrs Used( Actual Rate-Std Rate) =4740*(14-13.60)                1,896 (U) Direct LAbor Time Variance =Std Rate ( Actual Hrs used-Std Hrs for actual output)   =13.60*(4740-4820)                1,088 (F) Total Direct Labor Variance =                    808 (U) b The given statement does not match with the example given. In fact experienced or highly trained labor has resulted in higher labor rate variance. The experienced labor used has   caused the total labor hour efficiency higher than standard and the actual time required was less than standard.

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