Question

Japan Company produces lamps that require 3 standard hours per unit at a standard hourly rate of $18.00 per hour. Production of 8,700 units required 25,320 hours at an hourly rate of $18.40 per hour. What is the direct labor
(a) rate variance,

(b) time variance, and

(c) total cost variance?

Enter favorable variances as negative numbers.

a. Direct labor rate variance $ -10,128 Favorable

b. Direct labor time variance $

c. Total direct labor cost variance $

Answer 1

	Labor Rate Variance		(Actual Rate - Standard rate)*actual hours
	Labor Rate Variance		(18.4-18)*25320
	Labor Rate Variance		10128	Unfavorable
	Time Variance		(Actual Hours- Budgeted Hours )*Standard Rate
	Time Variance		(25320-26100)*18
	Time Variance		-14040	Favorable
total direct labor cost variance		Labor Rate Variance	+	Time Variance
total direct labor cost variance		10128-14040
total direct labor cost variance		-3912	Favorable