Direct Labor Variances Glacier Bicycle Company manufactures commuter bicycles from recycled materials. The following data for October of the current year are available: Quantity of direct labor used 500 hrs. Actual rate for direct labor
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
Glacier Bicycle Company manufactures commuter bicycles from recycled materials. The following data for October of the current year are available:
| Quantity of direct labor used | 500 hrs. |
| Actual rate for direct labor | $10.90 per hr. |
| Bicycles completed in October | 240 bicycles |
| Standard direct labor per bicycle | 2 hrs. |
| Standard rate for direct labor | $11.10 per hr. |
a. Determine for October 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 | ||
| Direct Labor Time Variance | ||
| Total Direct Labor Cost Variance |
b. How much direct labor should be debited to Work in Process?
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