Question

# The following data relate to labor cost for production of 6,300 cellular telephones: Actual: 4,280 hrs....

The following data relate to labor cost for production of 6,300 cellular telephones:

 Actual: 4,280 hrs. at \$15.70 \$67,196 Standard: 4,210 hrs. at \$16.00 \$67,360

a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter all values as a positive number and then identify the variance (e.g. Favorable or Unfavorable) in the adjacent column.

 Rate variance \$ Time variance \$ Total direct labor cost variance \$

b. The employees may have been less-experienced or poorly trained, thereby resulting in a   labor rate than planned. The lower level of experience or training may have resulted in   efficient performance. Thus, the actual time required was   than standard.

a. Labor rate variance = (standard rate - actual rate)*actual hours

= (16-15.70)*4280 = \$1284 Favorable

Labor time variance = (4210-4280)*16 = \$1120 Unfavorable

Total direct labor cost variance = 67360-67196 = \$164 Favorable

b. The employees may have been less-experienced or poorly trained, thereby resulting in a lower labor rate than planned. The lower level of experience or training may have resulted in less efficient performance. Thus, the actual time required was higher than standard.

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