Direct Labor Variances La Batre Bicycle Company manufactures commuter bicycles f

Question

Direct Labor Variances

La Batre Bicycle Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available:

a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost 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?
$

Quantity of direct labor used 600 hrs. Actual rate for direct labor $11.5 per hr. Bicycles completed in April 280 bicycles Standard direct labor per bicycle 2 hrs. Standard rate for direct labor $11.7 per hr.

Explanation / Answer

a) Direct labour rate variance = (11.7-11.50)*600 = -120 F

Direct labour efficiency variance = (280*2-600)*11.70 = 468 U

Total direct labour cost variance = (280*2*11.70-600*11.50) = 348 U

b) Direct labour should be debited in work in process = 280*2*11.70 = $6552

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