Question

The Landry Company has developed standards for labor. During June, 69 units were scheduled and 100 were produced. Data related to labor are: Standard hours allowed 2 hours per unit Standard wages allowed $3.40 per hour Actual direct labor 250 hours (total cost $825) What is the labor rate variance for June? $25 favorable. $74 unfavorable. $74 favorable. $25 unfavorable.

Answer 1

Answer:

$25 favorable

Explanation:

$(standard\:rate-actual\:rate) \times actual \: hours = DL \: rate \: variance$

std rate           $ 3.40

actual rate   $ 3.30  (825 total cost / 250 labor hours)

actual hours 250

$(3.4-3.3) \times 250 = DL \: rate \: variance$

difference  $0.10

250 x 0.1 = rate variance

rate variance  $25.00

The diference between the actual cost per hour of the employee and the standard we considered is positive, it cost less to have the employee working on the product. the variance is favorable.