
Concept explainers
Concept Introduction:
Variances Analysis: A
Direct labor variances: Direct labor variances refer to the difference between the standard direct labor cost and actual direct labor cost incurred. Direct labor cost variances are categorized into following categories:
1. Direct labor Rate variance: this variance shows the difference of standard rate and actual rate of labor. The formula to calculate this variance is as follows:
2. Direct labor efficiency variance: this variance shows the difference of standard usage and actual usage of labor. The formula to calculate this variance is as follows:
3. Direct labor cost variance: this variance shows the difference of standard cost and actual cost of labor. The formula to calculate this variance is as follows:
Or
Direct Labor cost variance = Actual Labor cost – Standard Labor Cost
Requirement-1:
To determine: The calculation of direct labor cost variance
Requirement -2:
To explain: Direct labor cost variance and its calculation
Requirement -3:
To explain: Direct labor efficiency variance and its calculation
Requirement -4:
To explain: Unfavorable Direct labor cost variance and the measures to control this variance
Requirement -5:
To explain: Unfavorable Direct labor efficiency variance and the measures to control this variance

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Chapter 23 Solutions
Horngren's Accounting (12th Edition)
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