eBook

Direct Labor Variances

Ada Clothes Company produced $40,000$ units during April. The Cutting Department used $12,800$ direct labor hours at an actual rate of $$16\mathrm{.}50$ per hour. The Sewing Department used $19,600$ direct labor hours at an actual rate of $$19\mathrm{.}25$ per hour. Assume there were no work in process inventories in either department at the beginning or end of the month. The standard labor rate is $$18\mathrm{.}00.$ The standard labor time for the Cutting and Sewing departments is $0\mathrm{.}3$ hour and $0\mathrm{.}5$ hour per unit, respectively.

a$.$ Determine the direct labor rate, direct labor time, and total direct labor cost variance for the $(1)$ Cutting Department and $(2)$ Sewing Department. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a posit number.

b$.$ The two departments have opposite results. The Cutting Department has a$($n$)$ favorable $x$ rate variance and a$($n$)$ unfavorable $x$ time variance, resulting in a total favorable $x$ cost variance. In contrast, the Sewing Department has $a(n)$ unfavorable $x$ rate variance but has $a(n),$ ime variance, resulting in a total unfavorable $$ cost variance.