Answer:$2,125 unfavorable
Explanation:
Given
Standard costs 9,000 hours at $5.50
Actual costs 8,500 hours at $5.75
we have two formulas to calculate for direct labor rate variance is:
1ST ----Direct Labor rate variance = (Actual Rate- Standard Rate ) x Actual hour
=( $5.75 -$5.50) x 8,500 = $2,125 unfavorable
2ND----Direct Labor Rate Variance=Actual Direct Labor Cost Incurred - Standard Direct Labor Cost Based on Actual Hours
=Actual Hours x Actual Rate -Actual Hours x Standard Rate
= ($5.75 x 8,500 hours)-($5.50 x 8,500 hours)
$48,875 - $46,750 = $2,125 unfavorable
when the actual rate is higher than the standard rate, the Direct Labor Rate Variance is unfavorable and if the actual rate is lower than standard rate, the variance is favorable.
