Direct Labor Variances

The following data relate to labor cost for production of 3,800 cellular telephones:

Actual:	2,540 hrs. at $14.70
Standard:	2,500 hrs. at $14.90

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	$	Unfavorable

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.