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Direct labor variances Reincarnation Bicycle Company manufactures commuter bicycles from recycled materials. The following data for April of the current year are available: Quantity of direct labor used 1,530 hrs. Actual rate for direct labor $17.00 per hr. Bicycles completed in April 500 Standard direct labor per bicycle 3 hrs. Standard rate for direct labor $17.50 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?

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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615
Chapter 23, Problem 23.9EX
Textbook Problem
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Direct labor variances

Reincarnation Bicycle Company manufactures commuter bicycles from recycled materials. The following data for April of the current year are available:

Quantity of direct labor used 1,530 hrs.
Actual rate for direct labor $17.00 per hr.
Bicycles completed in April 500
Standard direct labor per bicycle 3 hrs.
Standard rate for direct labor $17.50 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

The direct labor rate variance.

Explanation of Solution

The direct labor rate variance is determined as follows:

Direct labor rate variance = [(Actual rate per hourStandard rate per hour)× Actual hours]=[($17

b.

To determine

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

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Chapter 23 Solutions

Accounting (Text Only)
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