Direct Materials and Direct Labor Variance Analysis Fancy Fixture Company manufa

Question

Direct Materials and Direct Labor Variance Analysis Fancy Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 100 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows: Standard wage per hr. $21.00 Standard labor time per faucet 20 min. Standard number of lbs. of brass 5 lbs. Standard price per lb. of brass $2.80 Actual price per lb. of brass $2.72 Actual lbs. of brass used during the week 59,875 lbs. Number of faucets produced during the week 11,820 Actual wage per hr. $21.40 Actual hrs. for the week 4,000 hrs 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 $ Favorable Time variance $ Favorable Total direct labor cost variance

Explanation / Answer

Answer: Direct labor rate variance=(Standard rate-Actual rate)*Actual hours

=($21-$21.40)*4000 hrs

=1600 U

Direct labor time variance=(Standard hours-Actual hours)*standard rate

=(3940-4000)*21

=1260 U

Direct labor cost variance=1600U+1260U

=2860 U

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