Question
Direct Labor Variances The following data relate to labor cost for production of 3,900 cellular telephones: Actual: 2,610 hrs. at $14.70 $38,367 Standard: 2,570 hrs.
Direct Labor Variances
The following data relate to labor cost for production of 3,900 cellular telephones:
Actual: | 2,610 hrs. at $14.70 | $38,367 |
Standard: | 2,570 hrs. at $15.00 | $38,550 |
a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter all values as a positive number and then identify the variance (e.g. Favorable or Unfavorable) in the adjacent column.
Rate variance | $ | Favorable |
Time variance | $ | Unfavorable |
Total direct labor cost variance | $ | Favorable |
b. The employees may have been less-experienced or poorly trained, thereby resulting in a lower labor rate than planned. The lower level of experience or training may have resulted in less efficient performance. Thus, the actual time required was more than standard.
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