EX 22-9 Direct labor variances Obj. 3, 5 A. Time variance, La Batre Bicycle Comp

Question

EX 22-9 Direct labor variances Obj. 3, 5 A. Time variance, La Batre Bicycle Company manufactures commuter bicycles from recycled materials. The fol- S(5,600) F lowing data for July of the current year are available: Quantity of direct labor used Actual rate for direct labor Bicycles completed in April Standard direct labor per bicycle Standard rate for direct labor 5,050 hrs. $16.80 per hr. 1,000 bicycles 5.4 hrs. $16.00 per hr SHOW ME HOW A. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance B. How much direct labor should be debited to Work in Process?

Explanation / Answer

Answer

A ) direct labour rate variance = (actual rate per hour - standard rate per hour ) * actual hours

= ( 16.80 - 16 ) * 5050

= 4040 unfavourable

direct labour time variance = ( actual direct labour hour - standard direct labour hour ) *

standard rate per hour

= ( 5050 - (100 * 5..4 ) ) * 16

= - 5600 favourable

total direct labour cost variance = direct labour rate variance + direct labour time variance

= 4040 + ( - 5600 )

= - 1560 favorable

B ) standard direct labour cost = standard hours * standard rate per hour

= 5400 * 16

= 86400

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