Question

Bellingham Company produces a product that requires 10 standard direct labor hours per unit at a standard hourly rate of $22.00 per hour. If 4,300 units used 41,300 hours at an hourly rate of $23.10 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. a. Direct labor rate variance $ Unfavorable b. Direct labor time variance $ Favorable c. Direct labor cost variance $ Unfavorable

Answer #1

**Solution:**

Here,

Actual Rate = $23.10 per hour

Standard Rate = $22 per hour

Actual hours worked = 41,300 hrs

Standard hours worked = 4300 units * 10 hrs

= 43,000 hrs

**Direct Labor Rate Variance = Actual hour ( Actual Rate -
Standard Rate )**

**= 41,300 ( 23.10 - 22 )**

**= 41,300 * 1.1**

**= - 45,430 Favorable**

**Direct Labor Time Variance = ( Actual hours - Standard
hours ) * Standard Rate**

**= ( 41,300 - 43,000 ) * 22**

**= 1700 * 22**

**= 37,400 Unfavorable**

**Direct Labor Cost Variance = Direct Labor Rate Variance
+ Direct Labor time Variance**

**= 45,430 F + 37,400 U**

**= -8,030 F**

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