Question Content Area Direct Labor Variances Corpus Christi Bicycle Company manufactures commuter bicycles from recycled materials. Corpus Christi Bicycle Company records standard costs in its accounts. The following data for March are available: Line Item Description Value Quantity of direct labor used 450 hrs. Actual rate for direct labor $14.00 per hr. Bicycles completed in March 210 bicycles Standard direct labor per bicycle 2 hrs. Standard rate for direct labor $14.30 per hr. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. Determine for March 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. Line Item Description Amount Variance Direct Labor Rate Variance $fill in the blank 2 Direct Labor Time Variance $fill in the blank 4 Total Direct Labor Cost Variance $fill in the blank 6 b. How much direct labor should be debited to Work in Process? fill in the blank 1 of 1$
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.
Question Content Area
Direct Labor Variances
Corpus Christi Bicycle Company manufactures commuter bicycles from recycled materials. Corpus Christi Bicycle Company records
| Line Item Description | Value |
|---|---|
| Quantity of direct labor used | 450 hrs. |
| Actual rate for direct labor | $14.00 per hr. |
| Bicycles completed in March | 210 bicycles |
| Standard direct labor per bicycle | 2 hrs. |
| Standard rate for direct labor | $14.30 per hr. |
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
a. Determine for March 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.
| Line Item Description | Amount | Variance |
|---|---|---|
| Direct Labor Rate Variance | $fill in the blank 2 |
|
| Direct Labor Time Variance | $fill in the blank 4 |
|
| Total Direct Labor Cost Variance | $fill in the blank 6 |
|
b. How much direct labor should be debited to Work in Process?
fill in the blank 1 of 1$
Lets understand the basics.
Direct labor rate variance is a variance between the rate at which labor should be hired against the rate at which it is hired.
Direct labor rate variance = (Actual rate - Standard rate)*Actual hour worked
Direct labor time variance is a variance between the time which should be taken for production against actual time taken.
Direct labor time variance = (Actual hour worked- Standard hours)*Standard rate
Direct labor cost variance is a variance between the standard direct labor cost with actual direct labor cost.
Direct labor cost variance = Actual costs - Standard cost
Standard cost incurred needs to debited to work in progress account.
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