EX 23-9 direct labor variances

Hoschild Bicycle Company manufactures bicycles. The following data for September of the current year are available:

Quantity of direct labor used 850 hrs.
Actual rate for direct labor $15.60 per hr.
Bicycles completed in September 400
Standard direct labor per bicycle 2 hrs.
Standard rate for direct labor $16.00 per hr.

a. Determine the direct labor rate and time variances.
b. How much direct labor should be debited to Work in Process?

Answer:


a. Rate variance: 
Direct Labor 
Rate Variance 
Direct Labor 
Rate Variance 
Direct Labor 
Rate Variance 
Time variance: 
Direct Labor 
Time Variance 
Direct Labor 
(Actual Rate per Hour – Standard Rate per Hour) 
=   ×
 Actual Hours 
=   ($15.60 – $16.00) × 850 hrs. 
=   –$340 Favorable 

=   (Actual Direct Labor Hours – Standard Direct Labor Hours) 
× Standard Rate per Hour 
=

Time Variance (850 hrs. – 800 hrs.*) × $16.00 per hour 
Direct Labor 
Time Variance 

=   $800 Unfavorable 
* 2.00 hrs. × 400 units 
Total direct labor cost variance: 
Direct Labor 
Cost Variance    = 

Direct Labor Rate Variance + Direct Labor Time Variance 
Direct Labor 
Cost Variance 
Direct Labor 
Cost Variance 

=   –$340 Favorable + $800 Unfavorable 
=   $460 Unfavorable 
b. Debit to Work in Process:  $12,800  
 Standard hours at actual production………………………………………… 800 
 × Standard rate…………………………………………………………………… $  16.00 
 Standard direct labor cost……………………………………………………… $12,800