Direct Labor Variances The following data relate to labor cost for production of
ID: 2429728 • Letter: D
Question
Direct Labor Variances
The following data relate to labor cost for production of 5,300 cellular telephones:
Actual: 3,570 hrs. at $15.2
Standard: 3,510 hrs. at $15.5
a. Determine the direct labor The cost associated with the difference between the standard rate and the actual rate paid for direct labor used in producing a commodity.rate variance, direct labor The cost associated with the difference between standard and actual hours of direct labor spent for producing a commodity.time variance, and total direct labor The difference between actual cost and the flexible budget at actual volumes.cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Rate variance $
Favorable
Unfavorable
Time variance $
Favorable
Unfavorable
Total direct labor cost variance $
Favorable
Unfavorable
b. The employees may have been less-experienced or poorly trained, thereby resulting in a
higher
lower
labor rate than planned. The lower level of experience or training may have resulted in
more
less
efficient performance. Thus, the actual time required was
more
less
than standard
Explanation / Answer
Std hours: 3510 hours Std rate per hour: $ 15.50 per hour Actual Hours worked: 3570 hours Actual Rate per hour: $ 15.20 per hour Labour cost variance: Std hours*Std rate - Actual Hours*Actual rate 3510 *15.50 - 3570 *15.20 = 141 Fav Labour rate variance: Actual Hours (Std rate-Actual rate) 3570 (15.50 - 15.20) = 1071 Fav Labour efficiency Variance: Std rate (Std hours-Actual Hours) 15.50 (3510-3570) = 930 Unfav Reqb: The employees may have been less experienced or poorly trained, thereby resulting in a Lower labour rate than planned. The low level of experience or traiining may have resulted in Less Efficient performance Thus the actual time required was More than standard
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