Direct Labor Variances Alpine Bicycle Company manufactures road bikes. The follo

Question

Direct Labor Variances

Alpine Bicycle Company manufactures road bikes. The following data for September of the current year are available:

a.  Determine the direct labor rate variance and direct labor time variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

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

Direct Labor Variances

Alpine Bicycle Company manufactures road bikes. The following data for September of the current year are available:

Quantity of direct labor used 480 hrs. Actual rate for direct labor $11.30 per hr. Bicycles completed in September 230 Standard direct labor per bicycle 2 hrs. Standard rate for direct labor $11.50 per hr.

a.  Determine the direct labor rate variance and direct labor time variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Rate variance $ Time variance $ Total direct labor cost variance $

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

Explanation / Answer

Hi,

Please find the answer as follows:

Standard Production with 480 hours should been = 480/2 = 240 bicycles

Actual Units Completed with 480 hours was = 230 bicycles

Work in Process (Units) at the end of the month = 240 - 230 = 10 bicycles

Amount of direct labor debited to Work in Process = 10*11.50 = 115

Answer is 115.

Thanks.

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