Direct Labor Variances Glacier Bicycle Company manufactures commuter bicycles from recycled materials. The following data for October are available: 5,000 hrs. Quantity of direct labor used Actual rate for direct labor $22.75 per hr. 800 bicycles Bicycles completed in October Standard direct labor per bicycle 6.0 hrs. Standard rate for direct labor $24.00 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. Favorable - 6,250 Direct Labor Rate Variance Unfavorable $ 4,800 Direct Labor Time Variance Favorable $ х Total Direct Labor Cost Variance b. How much direct labor should be debited to Work in Process?

Question

Business

Arianna Irwin

15 October, 03:55

Direct Labor Variances Glacier Bicycle Company manufactures commuter bicycles from recycled materials. The following data for October are available: 5,000 hrs. Quantity of direct labor used Actual rate for direct labor $22.75 per hr. 800 bicycles Bicycles completed in October Standard direct labor per bicycle 6.0 hrs. Standard rate for direct labor $24.00 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. Favorable - 6,250 Direct Labor Rate Variance Unfavorable $ 4,800 Direct Labor Time Variance Favorable $ х Total Direct Labor Cost Variance b. How much direct labor should be debited to Work in Process?

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Answers (2)

Know the Answer?

Courtney · Answer 1

a) Direct labor rate variance

=5000 * (22.75-24)

=-$6250 Favorable

Direct labor time variance

=24 * (5000-800*6)

=$4800 Unfavorable

Total Direct labor cost variance

= (5000*22.75) - (800*6*24)

=-$1450 Favorable

b) Direct labor debited to Work in process

=800*6*24

=115200

Memphis Hawkins · Answer 2

Direct Labor Rate variance = - 6250 fav

Direct labor time variance = 4800 Unfavorable

Total Direct Labor Cost Variance-1450 fav

Work In Process 116650 Dr.

Explanation:

Glacier Bicycle Company

Direct Labor Rate variance = (actual hours * actual rate) - (actual hours * standard rate)

Direct Labor Rate variance = (5000 * 22.75) - (5000*24)

Direct Labor Rate variance = $113750 - 120,000 = - 6250 fav

Direct Labor Rate variance = - 6250 fav

Direct labor time variance = (actual hours * standard rate) - (standard hours * standard rate)

Direct labor time variance = (5000 * 24) - (4800 * 24)

Direct labor time variance = 120,000-115200

Direct labor time variance = 4800 Unfavorable

Total Direct Labor Cost Variance = Direct Labor Rate variance + Direct labor time variance = - 6250 fav + 4800 Unfavorable = - 1450 fav

b. The journal entry would be

Work In Process 116650 Dr.

Direct Labor Cost Variance 1450 Cr

Payroll 115200

Direct Labor Debited to Work In Process = $116650