Question

During March 2020, Toby Tool & Die Company worked on four jobs. A review of direct labor costs reveals the following summary data. Actual StandardJob Number Hours Cost Hours Costs Totla varianceA257 210 $4,830 216 $4,968 $138 F A258 480 12,000 464 10,672 1,328 U A259 330 7,953 330 7,590 363 U A260 110 2,310 102 2,346 36 F Total variance $1,517 U Analysis reveals that Job A257 was a repeat job. Job A258 was a rush order that required overtime work at premium rates of pay. Job A259 required a more experienced replacement worker on one shift. Work on Job A260 was done for one day by a new trainee when a regular worker was absent.Required:Prepare a report for the plant supervisor on direct labor cost variances for March.

Answer 1

Answer:

Toby Tool & Die Company

A Report on the Direct Labor Cost Variances for March, 2020:

                              Variances            Variance

Job Number    Quantity     Rate            Total

1. A257              $138 F                           $138 F

2. A258            $368 U     $960 U     $1,328 U

3. A259                              $363 U       $363 U

4. A260            $184 U      $220 F         $36 F

Total                 $414 U     $1,103 U     $1,517 U

Explanation:

a) Data and Calculations:

                           Actual              Standard  

Job Number  Hours   Cost     Hours    Costs     Total variance

A257             210    $4,830      216     $4,968     $138 F

A258            480    12,000      464      10,672    1,328 U

A259            330      7,953      330       7,590      363 U

A260             110       2,310       102       2,346        36 F

Total variance                                                    $1,517 U

                           Actual                            Standard  

Job Number  Hours   Cost  Rate   Hours    Costs  Rate   Total variance

A257             210    $4,830  $23    216     $4,968  $23      $138 F

A258            480    12,000    25    464      10,672    23     1,328 U

A259            330      7,953   24.1   330       7,590    23       363 U

A260             110       2,310   21       102       2,346    23         36 F

Total variance                                                                    $1,517 U

1. A257's favorable variance of $138 was quantity variance as less hours were used when compared to the standard hours for the job.

= (Standard hours - Actual hours) * Standard rate = (216 - 210) * $23

= 138 F

2. A258 rush order with overtime at premium rates of pay

Direct labor rate variance = (Standard Rate - Actual Rate) * Actual hours

= ($23 - $25) * 480 = $960 U

Direct labor quantity variance = (Standard hours - Actual hours) * Standard Rate

= 464 - 480 * $23 = $368 U

Total variance = 1,328 U ($960 U + $368 U)

3. A259 more experienced replacement worker required on one shift

Direct labor rate variance = (Standard Rate - Actual Rate) * Actual hours

= ($23 - $24.1) * 330 = $363 U

4. A260 done by a new trainee

Direct labor rate variance = (Standard Rate - Actual Rate) * Actual hours

= ($23 - $21) * 110 = $220 F

Direct labor quantity variance = (Standard hours - Actual hours) * Standard Rate

= (102 -110) * $23 = $184 U

Total variance = $220 F - $184 U = $36 F