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Direct Labor Variances The following data relate to labor cost for production of 4,600 cellular telephones: Actual: 3,090 hrs. at $16.10 Standard: 3,040 hrs. at

Direct Labor Variances

The following data relate to labor cost for production of 4,600 cellular telephones:

Actual: 3,090 hrs. at $16.10
Standard: 3,040 hrs. at $16.40

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.

Rate variance $ Favorable
Time variance $ Unfavorable
Total direct labor cost variance $ Favorable

b. The employees may have been less-experienced workers who were paid less than more-experienced workers 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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