Question

Direct labor variances Bellingham Company produces a product that requires 3 standard direct labor hours per unit at a standard hourly rate of $22.00 per hour. 15,000 units used 61,900 hours at an hourly rate of $19.85 per hour. What is the direct labor (a) rate variance, (b) time variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
a. Direct labor rate variance $ Favorable
b. Direct labor time variance $ Unfavorable
c. Direct labor cost variance $ Favorable

Answer 1

Answer:

Results are below.

Explanation:

To calculate the direct labor rate variance, we need to use the following formula:

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor rate variance= (22 - 19.85)*61,900

Direct labor rate variance= $133,085

Now, the direct labor time (efficiency variance):

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Direct labor time (efficiency) variance= (45,000 - 61,900)*22

Direct labor time (efficiency) variance= $371,800 unfavorable

Standard quantity= 15,000*3= 45,000

Finally, the total direct labor cost variance:

Total direct labor cost variance= Direct labor rate variance - Direct labor time (efficiency) variance

Total direct labor cost variance= 133,085 - 371,800

Total direct labor cost variance= $238,715 unfavorable