A 1 Problem 2: Direct Labor Variances: B C D E F 2 3 The standard costs and actual costs for direct labor in the manufacture of 2,500 units of product are as fo 4 5 Actual Standard 6 Labor rate per hour $11.80 $11.00 7 Amount of hour needed per unit of product 3 3.2 8 Actual production of units 2,500 9 10 Required: 11 Compute the followings variances and indicate if they are favorable or unfavora 12 A. Direct labor Rate variance (DLRV) 13 B. Direct labor Time variance (DLTV) 14 C. Total Direct labor Cost variance (DLCV) 15 16 Solution: 17 A. DLRV (AR-SR) x AH for Actual Production 18 19 20 B. DLTV = (AH-SH) for Actual Production x SR 21 22 23 C. DLCV = DLRV + DLTV 24 25 Actual DL cost per unit of product (AC): 26 Standard DL cost per unit of product (SC): 27 28 Alternate formula to compute DLCV = 29 (Actual cost - standard cost) per unit x # of units 30 31 32 33 34 35 36 37 38 Acronyms: AR Actual rate per unit of Material SR=tandard rate per unit of Material AH = Actual Hour needed for Actual production SH = Standard Hour allowed for Actual production