Question

Direct Labor Variances La Barte Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available: Quantity of direct labor used 5,050 hrs. Actual rate for direct labor $16.80 per hr. Bicycles completed in July 1,000 bicycles Standard direct labor per bicycle 5.4 hrs. Standard rate for direct labor $16.00 per hr. 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.

Answer 1

Step-by-step explanation:

a. The computation of the labor rate variance is shown below:

= Actual Hours × (Actual rate - standard rate)

= 5,050 × ($16.80 per hour - $16 per hour)

= 5,050 × $0.80 per hour

= $4,040 unfavorable

b. The computation of the labor time variance is shown below:

= Standard Rate × (Actual hours - Standard hours)

= $16 per hour × (5,050 hours - 1,000 × 5.4 hours)

= $16 per hour × -350 hours

= -$5,600 favorable

c. The computation of the total labor variance is shown below:

= (Actual hours × Actual rate) - (Standard hours × standard rate)

= (5,050 hours × $16.80 per hour) - (1,000 bicycles × 5.4 hours × $16 per hour)

= $84,840 - $86,400

= -$1,560 favorable