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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?
Accounting (Text Only)
Solutions
Accounting (Text Only)
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.
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:
b.
To identify: The amount of direct labor that should be debited to work in process.
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