Question

Direct Labor Variances

Greeson Clothes Company produced 18,000 units during June of the current year. The Cutting Department used 3,400 direct labor hours at an actual rate of $13.90 per hour. The Sewing Department used 5,600 direct labor hours at an actual rate of $13.60 per hour. Assume that there were no work in process inventories in either department at the beginning or end of the month. The standard labor rate is $13.80. The standard labor time for the Cutting and Sewing departments is 0.20 hour and 0.30 hour per unit, respectively.

a. Determine the direct labor rate, direct labor time, and total direct labor cost variance for the Cutting Department and Sewing Department. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

	Cutting Department	Sewing Department
Direct labor rate variance	$	$
Direct labor time variance	$	$
Total direct labor cost variance	$	$

b. The two departments have opposite results. The Cutting Department has a(n)   rate and a(n)   time variance, resulting in a total   cost variance. In contrast, the Sewing Department has a(n)   rate variance but has a   time variance, resulting in a total   cost variance.

Answer 1

a
Cutting Department:
Direct labor rate variance	340	Unfavorable	=3400*(13.9-13.8)
Direct labor time variance	-2760	Favorable	=13.8*(3400-18000*0.2)
Total direct labor cost variance	-2420	Favorable	=(3400*13.9)-(18000*13.8*0.2)
Sewing Department:
Direct labor rate variance	-1120	Favorable	=5600*(13.6-13.8)
Direct labor time variance	2760	Unfavorable	=13.8*(5600-18000*0.3)
Total direct labor cost variance	1640	Unfavorable	=(5600*13.6)-(18000*0.3*13.8)
b
The two departments have opposite results. The Cutting Department has a(n) Unfavorable rate and a(n) favorable time variance, resulting in a total favorable cost variance. In contrast, the Sewing Department has a(n) favorable rate variance but has a Unfavorable time variance, resulting in a total Unfavorable cost variance.