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.
Direct Labor Rate Variance $ Unfavorable
Direct Labor Time Variance $ Favorable
Total Direct Labor Cost Variance $ Favorable
b. How much direct labor should be debited to Work in Process?

Answer 1

Answer: See explanation

Step-by-step explanation:

a. Determine the direct labor rate variance.

This will be:

= (Actual rate per hour - Standard rate per hour) × Actual hour

= ($16.80 - $16.00) × 5050

= 0.80 × 5050

= 4040 unfavorable

Determine the direct labor time variance

This will be:

= 5050 - (1000 × 5.40) × $16

= (5050 - 5400) × 16

= -350 × 16

= -5400 favourable

Total direct labor cost variance

This will be:

= 4040 + -5400

= 1560 favorable

b. How much direct labor should be debited to Work in Process?

This will be:

= Standard hours × Standard rate per hour

= $5400 × 16

= $86400