Direct Labor Variances

The following data relate to labor cost for production of 3,700 cellular telephones:

Actual:	2,510 hrs. at $14.70	$36,897
Standard:	2,470 hrs. at $15.00	$37,050

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.