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14 May, 08:26

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 $16.80 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, 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.

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  1. 14 May, 11:02
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    a. The computation of the labor rate variance is shown below:

    = Actual Hours * (Actual rate - standard rate)

    = 5,050 * ($16.80 per hour - $16 per hour)

    = 5,050 * $0.80 per hour

    = $4,040 unfavorable

    b. The computation of the labor time variance is shown below:

    = Standard Rate * (Actual hours - Standard hours)

    = $16 per hour * (5,050 hours - 1,000 * 5.4 hours)

    = $16 per hour * - 350 hours

    = - $5,600 favorable

    c. The computation of the total labor variance is shown below:

    = (Actual hours * Actual rate) - (Standard hours * standard rate)

    = (5,050 hours * $16.80 per hour) - (1,000 bicycles * 5.4 hours * $16 per hour)

    = $84,840 - $86,400

    = - $1,560 favorable
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