Direct Labor Variances Tip Top Corp. produces a product that requires 4 standard

Question

Direct Labor Variances Tip Top Corp. produces a product that requires 4 standard hours per unit at a standard hourly rate of $8 per hour. If 3,300 units required 12,700 hours at an hourly rate of $8.24 per variance as a positive number a. Direct labor rate variance b. Direct labor time variance c. Direct labor cost variance hour, what is the diret labor (o) rate variance, (b) time vaniance, and (e) coust variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable

Explanation / Answer

Direct Labour rate variance = SRAH - ARAH = $ 8 *12700 HRS - $ 8.24 * 12700 HRS

= $ 101600 - $ 104648 = $ 3048 adverse or Unfavourable variance

Direct Labour time variance = SR( SH - AH)   = $ 8 * ( 13200 hrs - 12700 hrs ) = - $ 4000 (favourable variance)

Direct labour cost variance = SRSH - ARAH = $8*( 3300 UNITS *4) - $ 8.24 * 12700 HRS

= $ 105600 - $ 104648 = - $ 952 (favourable variance)

where SH = STANDARD HOURS = 3300*4 = 13200HRS

SR = $ 8 PER HOUR

AH = ACTUAL HOURS = 12700 HOURS

AR = $ 8.24 PER HOUR

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