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: Quantity of direct labor used Actual rate for direct labor Bicycles completed in April Standard direct labor per bicycle Standard rate for direct labor 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 Direct Labor Rate Variance Direct Labor Time Variance Total Direct Labor Cost Variance b. How much direct labor should be debited to Work in Process? 520 hrs $12.5 per hr 2 hrs. $12.8 per hr Favorable Unfavorable

Explanation / Answer

a) Direct labour rate variance = (12.8-12.50)*520 = 156 Favorable

Direct labour time variance = (240*2-520)*12.80 = 512 Unfavorable

Direct labour cost variance = (240*2*12.80)-(520*12.50) = 356 Unfavorable

b) Direct labour in work in process = (240*2*12.80) = 6144

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