Direct Labor Variances

The following data relate to labor cost for production of 5,100 cellular telephones:

Actual:	3,440 hrs. at $13.20
Standard:	3,390 hrs. at $13.50

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 OR unfavorable

Time variance = $_________________ favorable OR unfavorable

Total direct labor cost variance = $_________________ favorable OR unfavorable

b. The employees may have been less-experienced workers who were paid less than more-experienced workers or poorly trained, thereby resulting in a higher OR lower labor rate than planned. The lower level of experience or training may have resulted in more OR less efficient performance. Thus, the actual time required was more OR less than standard.