Direct Labor Variances Re-Cycle Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available: Quantity of direct labor used 780 hrs. Actual rate for direct labor $12.20 per hr. Bicycles completed in July 370 bicycles Standard direct labor per bicycle 2 hrs. Standard rate for direct labor $12.40 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. Direct labor rate variance $fill in the blank 1 Direct labor time variance fill in the blank 3 Total direct labor cost variance $fill in the blank 5 b. How much direct labor should be debited to Work in Process? $fill in the blank 7
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Direct Labor Variances
Re-Cycle Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available:
| Quantity of direct labor used | 780 hrs. |
| Actual rate for direct labor | $12.20 per hr. |
| Bicycles completed in July | 370 bicycles |
| Standard direct labor per bicycle | 2 hrs. |
| Standard rate for direct labor | $12.40 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.
| Direct labor rate variance | $fill in the blank 1 |
|
| Direct labor time variance | fill in the blank 3 |
|
| Total direct labor cost variance | $fill in the blank 5 |
|
b. How much direct labor should be debited to Work in Process?
$fill in the blank 7
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