Question

Direct Labor Variances The following data relate to labor cost for production of 3,700 cellular telephones: Actual: 2,530 hrs. at $13.9 Standard: 2,490 hrs. at $14.2 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 labor rate than planned. The lower level of experience or training may have resulted in b. The employees may have been less-experienced or poorly trained, thereby resulting in a lower less efficient performance. Thus, the actual time required was more than standard.

Answer 1

Answer
	Actual Hours	2530
	Actual Rate	$   13.9
	Standard Hours	2490
	Standard Rate	$   14.2
a)	Direct Labor rate variance = Actual hours ( Actual Rate - Standard rate )
	2530 ( $13.9 - $14.2 )
	$ 759 Favorable
	Direct Labor time variance = Standard rate ( Actual Hours - Standard Hours )
	$14.2 ( 2530 - 2490 )
	$ 568 Unfavorable
	Total direct labor cost variance = (Standard Rate * Standard Hours) - ( Actual Rate * Actual Hours )
	($ 14.2* 2490) - ($13.9* 2530)
	$ 191 Favorable
b)	The employees may have been less-experienced or poorly trained, thereby resulting in a
	higher labor rate than planned. The lower level of experience or training may have resulted
	in more  efficient performance. Thus, the actual time required was less than standard.