The following data relate to labor cost for production of 4,900 cellular telepho

Question

The following data relate to labor cost for production of 4,900 cellular telephones: Actual: 3,230 hrs. at $14.40 $46,512 Standard: 3,280 hrs. at $14.00 $45,920 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. Rate variance $ Time variance $ Total direct labor cost variance $ b. The employees may have been less experienced or poorly trained, thereby resulting in a labor rate than planned. The lower level of experience or training may have resulted in efficient performance. Thus, the actual time required was than standard.

Explanation / Answer

Direct labor rate variance = (Actual rate - standard rate) * Actual hour

= ($14.40 - $14) * 3230

= $1292

Direct labor time variance = (Actual hrs. * standard rate) - standard cost

= (3230 * 14) - 45920

= 45220-45920

= - $700

total direct labor cost variance= standard hrs * standard rate - actual hrs * actual rate

= (3280 * $14) - (3230 * $14.40)

=$45920 - $46512

= $592

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