The Freedom Clothes Company produced 19,000 units during June of the current yea

Question

The Freedom Clothes Company produced 19,000 units during June of the current year. The Cutting Department used 3,600 direct labor hours at an actual rate of $11.80 per hour. The Sewing Department used 6,000 direct labor hours at an actual rate of $11.50 per hour. Assume there were no work in process inventories in either department at the beginning or end of the month. The standard labor rate is $11.70. The standard labor time for the Cutting and Sewing departments is 0.20 hour and 0.30 hour per unit, respectively. Determine the direct labor rate, direct labor time, and total direct labor cost variance for the Cutting Department and Sewing Department. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. The two departments have opposite results. The Cutting Department has a(n) unfavorable rate and a(n) favorable T) favorable cost variance. In contrast, the Sewing Department has a(n) (favorable) rate variance, and has a very unfavorable time variance, resulting in a total unfavorable cost variance.

Explanation / Answer

Cutting dept Sewing dept Rate variance (AH X AR)-(AH X SR) (3600*11.80)-(3600*11.70) (6000*11.50)-(6000*11.70) 360 -1200 Time variance (AH X SR)-(SH X SR) (3600*11.70)-(3800*11.70) (6000*11.70)-(5700*11.70) -2340 3510 Direct cost variance (AH X AR)-(SHX SR) (3600*11.80)-(3800*11.70) (6000*11.50)-(5700*11.70) -1980 2310 Cutting dept Sewing dept AH(Actual hours worked 3600 6000 AR(Actual hour rate) 11.8 11.5 SR(Standard hour rate) 11.7 11.7 ST(Standard time per unit) 0.2 0.3 SH(19000 unit) 3800 5700 B) The cutting department has rate variance of 360 unfavourable varince and 2340 favourable time variance result in total 1980 favourable cost variance The sewing department has rate variance of 1200 favourable varince and 351 unfavourable time variance result in total 2310 un favourable cost variance

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