Japan Company produces lamps that require 3 standard hours per unit at a standard hourly rate of $12.00 per hour. Production of 8,900 units required 26,170 hours at an hourly rate of $12.20 per hour. What is the direct labor

(a) rate variance,

(b) time variance, and

(c) total cost variance? Enter favorable variances as negative numbers.

Question

Business

Mariana Maxwell

17 April, 17:51

Japan Company produces lamps that require 3 standard hours per unit at a standard hourly rate of $12.00 per hour. Production of 8,900 units required 26,170 hours at an hourly rate of $12.20 per hour. What is the direct labor

(a) rate variance,

(b) time variance, and

(c) total cost variance? Enter favorable variances as negative numbers.

+4

Answers (1)

Know the Answer?

Asia Woodward · Answer 1

(a) rate variance = $ 5,234, Adverse

(b) time variance = $ 6,360, Favourable

(c) total cost variance = $1,126, Favourable

Explanation:

(a) rate variance,

rate variance = (Standard Rate - Actual Rate) * Actual Hours

= ($12.00 - $12.20) * 26,170 hours

= $ 5,234, Adverse

(b) time variance, and

time variance = (Standard Hours - Actual Hours) * Standard Rate

= (26,700 hours - 26,170 hours) * $12.00

= $ 6,360, Favourable

(c) total cost variance

total cost variance = rate variance + time variance

= $ 5,234, Adverse + $ 6,360, Favourable

= $1,126, Favourable