eBook Show Me How Calculator Direct Labor Variances Bellingham Company produces

Question

eBook Show Me How Calculator Direct Labor Variances Bellingham Company produces a product that requires 6 standard direct labor hours per unit at a standard hourly rate of $11.00 per hour. If 2.,700 units used 16,800 hours at an hourly rate of $10.56 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 a. Direct labor rate variance b. Direct labor time variance c. Direct labor cost variance Favorable Unfavorable Favorable Feedback Y Check My Work Unfavorable varlances can be thought of as increasing costs (a debit), Favorable variances can be thought of as decreasing costs (a credit) The labor cost variance is the difference between the actual and standard labor cost. Learning Objective 3. 526 PM /152018 DOLL

Explanation / Answer

1 Direct Labour rate Variance = (Standard Labour Rate - Actual labour Rate) * Actual Labour Hours = (11.00 - 10.56) * 16800 = 7392 Favourable 2 Direct Labour Time Variance = (Standard labour hours - Actual Labour Hours) * Standard Rate = ( 6*2700 - 16800) * 11.00 = (16200-16800) * 11.00 = 6600 Unfavourable 3 Direct Labour Cost Variance = ( Standard Labour Rate * Standard Labour hours) - ( Actual Labour rate * Actual Labour hour) = (11 * 16200)   - (10.56 * 16800) = 178200 - 177408 = 792 favourable

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