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Problem - Direct labor variances - The New Day Clothes Company produced 18,000 units during June of the current year. The Cutting Department used 3,500 direct labor hours at an actual rate of $11.80 per hour. The Sewing Department used 5,800 direct labor hours at an actual rate of $12.15 per hour. Assume there were no work in process inventories in either department at the beginning or end of the month. The standard labor rate is $12.00. The standard labor time for the Cutting and Sewing departments is 0.19 hour and 0.33 hour per unit, respectively.
a. Determine the direct labor rate and time variance for the (1) Cutting Department and (2) Sewing Department.
b. Interpret your results.
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