Chapter 22, Problem 3ADM

Direct labor time variance

Maywood City Police uses variance analysis to monitor police staffing. The following table identifies three common police activities, the standard time to perform each activity, and their actual frequency to establish the expected cost to serve these activities.

Police Activity	Standard Hours per Activity	Actual Activities for Year	Total Employee Hours
Theft	0.60	7,000	4,200
Arrest	1.50	18,000	27,000
Patrol activities	0.30	9,000	2,700
			33,900

The police are paid $25 per hour.

The actual amount of hours per activity for the year were as follows:

Police Activity	Actual Hours per Activity
Theft	0.75
Arrest	2.00
Patrol activities	0.40

• A. Determine the total budgeted cost to perform the three police activities.
• B. Determine the total actual cost to perform the three police activities.
• C. Determine the direct labor time variance.
• D. What does the time variance suggest?