Direct Labor Variances The Freedom Clothes Company produced 20,000 units during

Question

Direct Labor Variances The Freedom Clothes Company produced 20,000 units during June of the current year. The Cutting Department used 3,800 direct labor hours at an actual rate of $13.70 per hour. The Sewing Department used 6,300 direct labor hours at an actual rate of $13.40 per hour. Assume there were no work in process inventories in either department at the beginning or end of the month. The standard labor rate is $13.60. The standard labor time for the Cutting and Sewing departments is 0.20 hour and 0.30 hour per unit, respectively.

a. Determine the direct labor rate, direct labor time, and total direct labor cost variance for the Cutting Department and Sewing Department. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Explanation / Answer

CUTTING DEPARTMENT Acttual production in units   20,000 units Actual labour hours used 3800 hours Actual rate per hour $ 13.70 per hour Std labour rate per hour $ 13.60 per hour Std labour hour per unit of output 0.20 hour per unit Std labour hours allowed for actual output(20000*.20) = 4000 hours Labour rate varaince = Actual hours used(Std rate pe rhour- actual rate per hour) 3800 hours( $ 13.60- $ 13.70) = $ 380 unfavorable Labour Time Variance = Std rate per hour (Std hours for actual output - Actual hours used) $ 13.60 ( 4000 hours -3800 hours) = $ 2,720 favorable Total labour cost variance = Std labour cost per actual output - Actual labour cost ( 13.60*4000 hours) - (13.70*3800)= $ 2,340 favorable SEWING DEPARTMENT Acttual production in units   20,000 units Actual labour hours used 6300 Hours Actual rate per hour $ 13.40 per labour hour Std labour rate per hour $ 13.60 per hour Std labour hour per unit of output 0.30 hour per unit Std labour hours allowed for actual output(20000*.30) = 6000 hours Labour rate varaince = Actual hours used(Std rate pe rhour- actual rate per hour) 6300 hours( $ 13.60- $ 13.40) = $ 1260 favorable Labour Time Variance = Std rate per hour (Std hours for actual output - Actual hours used) $ 13.60 ( 6000 hours -6300 hours) = $ 4080 unfavorable Total labour cost variance = Std labour cost per actual output - Actual labour cost ( 13.60*6000 hours) - (13.40*6300)= $ 2,820 unfavorable Cutting Sewing Labour rate variance 380 -1260 Labour time variance' -2720 4080 Total labour cost variance -2340 2820

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.