Question

Direct Labor Variances: ADA Clothes Company produced 12,000 units during April. The cutting department used 2,300 direct labor hours at an actual rate of $11.70 per hour. The sewing department used 3,800 direct labor hours at an actual rate of $11.40 per hour. Assuming no work-in-process inventories at the beginning or end of the month, with a standard labor rate of $11.60 and standard labor time of 0.2 hours and 0.3 hours per unit for the cutting and sewing departments, respectively, determine the direct labor rate, direct labor time, and total direct labor cost variance for the cutting department.

Answer 1

The direct labor rate variance for the cutting department is $230, the direct labor time variance is 0, and the total direct labor cost variance is $529,000.

Step-by-step explanation:

The direct labor rate variance can be calculated by subtracting the standard labor rate from the actual labor rate and multiplying it by the actual hours of labor used. In this case, the direct labor rate variance for the cutting department would be:

(Actual labor rate - Standard labor rate) x Actual labor hours

= ($11.70 - $11.60) x 2,300

= $230

The direct labor time variance can be calculated by subtracting the standard labor time per unit from the actual labor time per unit and multiplying it by the number of units produced. In this case, the direct labor time variance for the cutting department would be:

(Actual labor time per unit - Standard labor time per unit) x Number of units produced

= (0.2 - 0.2) x 12,000

= 0

The total direct labor cost variance can be calculated by multiplying the direct labor rate variance by the actual labor hours and adding it to the direct labor time variance multiplied by the standard labor rate. In this case, the total direct labor cost variance for the cutting department would be:

(Direct labor rate variance x Actual labor hours) + (Direct labor time variance x Standard labor rate)

= ($230 x 2,300) + (0 x $11.60)

= $529,000