Quantity of direct labor used 850 hrs.
Actual rate for direct labor $15.60 per hr.
Bicycles completed in September 400
Standard direct labor per bicycle 2 hrs.
Standard rate for direct labor $16.00 per hr.
a. Determine the direct labor rate and time variances.
b. How much direct labor should be debited to Work in Process?
Answer:
a. Rate variance:
Direct Labor
Rate Variance
Direct Labor
Rate Variance
Direct Labor
Rate Variance
Time variance:
Direct Labor
Time Variance
Direct Labor
(Actual Rate per Hour – Standard Rate per Hour)
= ×
Actual Hours
= ($15.60 – $16.00) × 850 hrs.
= –$340 Favorable
= (Actual Direct Labor Hours – Standard Direct Labor Hours)
× Standard Rate per Hour
=
Time Variance (850 hrs. – 800 hrs.*) × $16.00 per hour
Direct Labor
Time Variance
= $800 Unfavorable
* 2.00 hrs. × 400 units
Total direct labor cost variance:
Direct Labor
Cost Variance =
Direct Labor Rate Variance + Direct Labor Time Variance
Direct Labor
Cost Variance
Direct Labor
Cost Variance
= –$340 Favorable + $800 Unfavorable
= $460 Unfavorable
b. Debit to Work in Process: $12,800
Standard hours at actual production………………………………………… 800
× Standard rate…………………………………………………………………… $ 16.00
Standard direct labor cost……………………………………………………… $12,800
