Direct Labor Variances Bellingham Company produces a product that requires 5 sta

Question

Direct Labor Variances

Bellingham Company produces a product that requires 5 standard direct labor hours per unit at a standard hourly rate of $22.00 per hour. If 5,700 units used 29,400 hours at an hourly rate of $21.12 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Explanation / Answer

a. Direct labor rate variance =29400*(21.12-22)= -25872 Favorable b. Direct labor time variance = 22*(29400-5700*5)= 19800 Unfavorable c. Direct labor cost variance =(29400*21.12)-(5700*5*22)= -6072 Favorable

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