Question

Standards and Variance Analysis.

Retro Wear manufactures dresses in a small facility in Canton, New York. Information about the production week is as follows:

Standard wage per hour $11.90

Standard labor time per dress                           12 minutes

Standard number of yards of fabric per dress 3.7 yards

Standard price per yard of fabric $2.85

Actual price per yard of fabric   $2.75

Actual yards of fabric used this week              12,000 yards

Number of dresses made this week                 3,250

Actual wage per hour                                       $11.00

Actual hours worked this week 690 hours

Required:

Determine: A) the total DIRECT LABOR cost variance, B) the DL rate variance, C) and the DL time variance. Make sure to indicate Favorable or Unfavorable along with your variance amount in your answer. For credit, your work must be shown.

Answer 1

Basic Data:

Standard labor time per dress= 12 minutes

Standard labor hour rate = $11.90/hour

No. of dresses produced= 3250 dresses

Total Standard labor hour = 3250dresses* 12minutes/60 = 650hours

Actual labor hour rate = $11.00/hour

Actual labor hours worked = 690 hours

DIRECT LABOR COST VARIANCE

DIRECT LABOR COST VARIANCE = (Standard labor hour* Standard labor hour rate) –(Actual labor hours* Actual labor hour rate )

= (650 * 11.90) – (690 * 11)

= 7,735- 7,590

=$ 145 Favorable

2.)DIRECT LABOR RATE VARIANCE

DIRECT LABOR RATE VARIANCE = (Standard labor hour rate- Actual labor hour rate)* Actual labor hours

= (11.90- 11.00)* 690

= 0.90*690

= $ 621 Favorable

3) DIRECT LABOR TIME VARIANCE

DIRECT LABOR TIME VARIANCE = (Standard labor hour- Actual labor hours)*

Standard labor hour rate

= (650-690)* 11.90

= 40*11.90

= $ 476 Unfavorable