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19 January, 05:16

Direct Labor Variances Glacier Bicycle Company manufactures commuter bicycles from recycled materials. The following data for October of the current year are available: Quantity of direct labor used 500 hrs. Actual rate for direct labor $13.10 per hr. Bicycles completed in October 240 bicycles Standard direct labor per bicycle 2 hrs. Standard rate for direct labor $13.40 per hr. a. Determine for October 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. Direct Labor Rate Variance $ Direct Labor Time Variance $ Total Direct Labor Cost Variance $ b. How much direct labor should be debited to Work in Process? $

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  1. 19 January, 09:15
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    Labor Efficiency Variance=268 Unfavorable

    Labor Rate Variance = $ 150 Favorable

    Total Direct Labor Cost Variance = $ 118

    Work In Process $ 6432 debit

    Explanation:

    Glacier Bicycle Company

    Quantity of direct labor used 500 hrs.

    Actual rate for direct labor $13.10 per hr.

    Standard direct labor per bicycle 2 hrs.

    Standard rate for direct labor $13.40 per hr

    The labor efficiency variance = (Standard Hours allowed * standard labor Rate) - (Actual Hours * standard labor Rate)

    Labor Efficiency Variance = (SH * SR) - (AH*SR)

    Labor Efficiency Variance = (2 * 240 * 13.4) - (500 * 13.4)

    Labor Efficiency Variance = (480*13.4) - (500 * 13.4)

    Labor Efficiency Variance = $ 6432 - $ 6700 = 268 Unfavorable

    Labor Rate Variance = (actual hours * actual rate) - (actual hours * standard rate)

    Labor Rate Variance = (500 * 13.1) - (500*13.4) = 6550-6700 = $ 150 Favorable

    Total Direct Labor Cost Variance = Labor Efficiency Variance + Labor Rate Variance

    Total Direct Labor Cost Variance = 268 Unfavorable + $ 150 Favorable

    Total Direct Labor Cost Variance = $ 118

    Work In Process $ 6432 debit

    Labor Efficiency Variance 268 Unfavorable debit

    Labor Rate Variance$ 150 Favorable credit

    Accrued Payroll $ 6550 credit
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