Question

he following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.0 hours Standard labor rate $ 15.10 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 8,100 hours Actual total labor cost $ 119,880 Actual output 800 units What is the labor rate variance for the month? Group of answer choices

Answer 1

Answer:

Direct labor rate variance= $2,430 favorable.

Explanation:

Giving the following information:

Standard labor rate $ 15.10 per hour

Actual hours worked 8,100 hours

Actual total labor cost $ 119,880

To calculate the direct labor rate variance, we need to use the following formula:

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

Actual rate= 119,880/8,100= $14.8

Direct labor rate variance= (15.1 - 14.8)*8,100= $2,430 favorable.

It is favorable because the actual rate for direct labor was lower than the estimated rate.