Standard Direct Labor Cost The controller at your shoemaking company has determined that under normal conditions, you pay your employees $8.40 per hour, and it will take 2.6 hours of labor per pair of shoes. Given this information, calculate the standard cost of labor per pair of shoes. If required, round the standard labor per pair of shoes to the nearest cent. Manufacturing Costs Standard Price x Standard Hours per Pair = Standard Cost per Pair Direct Labor $8.40 2.60 21.84 Feedback Use the standard price and standard hours values shown to compute the standard labor cost per pair. Actual Direct Labor Cost During August, your shoe-making company incurred actual direct labor costs of $62,211 for 6,990 hours of direct labor in the production of 2,175 pairs of shoes. Given this information, calculate the actual cost of labor per hour. If required, round the actual cost of labor per hour to the nearest cent. Manufacturing Costs Actual Total Cost / Actual Total Hours = Actual Cost per Hour Direct Labor 62,211 6,990 $8.90 APPLY THE CONCEPTS: Conduct the direct labor cost variance analysis Illustrated Example: Calculating Direct Labor Cost Variance Complete the following graphic to compute the direct labor rate variance, the direct labor time variance, and the total direct labor cost variance for your shoe-making business. When required, enter the rates as dollars and cents. If required, use the minus sign to indicate a negative value.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter9: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 3PB: Direct materials, direct labor, and factory overhead cost variance analysis Road Gripper Tire Co....

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Standard Direct Labor Cost
The controller at your shoemaking company has determined that under normal conditions, you pay your employees $8.40 per hour, and it will take 2.6 hours of labor per pair of shoes. Given this information, calculate the standard cost of labor per pair of shoes. If required, round the standard labor per pair of shoes to the nearest cent.

Manufacturing Costs	Standard Price	x	Standard Hours per Pair	=	Standard Cost per Pair
Direct Labor	$8.40		2.60		21.84

Feedback

Use the standard price and standard hours values shown to compute the standard labor cost per pair.

Actual Direct Labor Cost
During August, your shoe-making company incurred actual direct labor costs of $62,211 for 6,990 hours of direct labor in the production of 2,175 pairs of shoes. Given this information, calculate the actual cost of labor per hour. If required, round the actual cost of labor per hour to the nearest cent.

Manufacturing Costs	Actual Total Cost	/	Actual Total Hours	=	Actual Cost per Hour
Direct Labor	62,211		6,990		$8.90

APPLY THE CONCEPTS: Conduct the direct labor cost variance analysis

Illustrated Example: Calculating Direct Labor Cost Variance

Complete the following graphic to compute the direct labor rate variance, the direct labor time variance, and the total direct labor cost variance for your shoe-making business. When required, enter the rates as dollars and cents. If required, use the minus sign to indicate a negative value.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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Variance: The difference between the actual cost or price and the budgeted (standard) cost or price is referred to as variance. Variance can either be favorable or unfavorable depending upon the various situations.

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