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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Direct labor variances

 La Barte Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available:

Quantity of direct labor used 5,050 hrs.
Actual rate for direct labor 516.80 per hr.
Bicycles completed in July 1,000 bicycles
Standard direct labor per bicycle 5.4 hrs.
Standard rate for direct labor $16.00 per hr.

 a.    Determine the direct labor rate variance, time variance, and total direct labor cost variance.

 b.    How much direct labor should be debited to Work in Process?

a.

To determine

Direct labor variances:

The difference between the actual labor cost in the production and the standard labor cost for actual production is known as direct labor cost variance. The direct labor variance can be classified as follows:

    • Labor rate variance.
    • Labor time variance.

To determine: The direct labor rate variance.

Explanation

The direct labor rate variance is determined as follows:

Direct labor rate variance = [(Actual rate per hourStandard rate per hour)× Actual hours]=[($16

b.

To determine

To identify: The amount of direct labor that should be debited to work in process.

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