Direct Labor Variances The following data relate to labor cost for production of 4,600 cellular...
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Direct Labor Variances The following data relate to labor cost for production of 4,600 cellular telephones: Actual: 3,120 hrs. at $13 Standard: 3,070 hrs. at $13.3 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. Rate variance $ Favorable Time variance $ Unfavorable Total direct labor cost variance $ Favorable b. The employees may have been less-experienced or poorly trained, thereby resulting in a lower labor rate than planned. The lower level of experience or training may have resulted in less efficient performance. Thus, the actual time required was more than standard. Feedback Unfavorable variances can be thought of as increasing costs (a debit). Favorable variances can be thought of as decreasing costs (a credit). The labor cost variance is the difference between the actual and standard labor cost.
Consider factors affecting labor performance.
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