Question

Japan Company produces lamps that require 3 standard hours per unit at a standard hourly rate...

Japan Company produces lamps that require 3 standard hours per unit at a standard hourly rate of $20.00 per hour. Production of 5,700 units required 16,590 hours at an hourly rate of $20.60 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 $
b. Direct labor time variance $
c. Total direct labor cost variance $
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Answer #1
Answer:
Particulars Formula and Calculation
a. Direct labor rate variance: = (Actual Rate - Standard Rate) * Actual Hours
= (20.60 - 20) * 16590
= $ 9954 (U)
b. Direct labor time variance: = (Standard Hours - Actual Hours) * Standard rate
= ((5700 *3) - 16590) * 20
= $ - 10200 (F)
c. Total direct labor cost variance: = (Actual Hours * Actual Rate) - (Standard hours * Standard Rate)
= (16590 * 20.60) - (17100 * 20)
= $ - 246 (F)

Favorable variances entered as negative numbers.

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