Question

Flapjack Corporation had 7,712 actual direct labor hours at an actual rate of $12.20 per hour. Original production had been budgeted for 1,100 units, but only 958 units were actually produced. Labor standards were 7.5 hours per completed unit at a standard rate of $13.13 per hour. The direct labor rate variance is a.$7,172.16 unfavorable b.$7,172.16 favorable c.$7,347.18 unfavorable d.$7,347.18 favorable

Answer 1

Answer:

The direct labor rate variance is $7,172.16 Favourable . The right answer is b.

Explanation:

According to the given data we have the following:

actual direct labor hours=7,712

actual rate=$12.20 per hour

standard rate=$13.13 per hour

In order to calculate The direct labor rate variance we would have the following formula:

Direct labour rate variance = (Standard rate-actual rate)×actual hours

Direct labour rate variance= ($13.13-12.20)×7,712

Direct labour rate variance = $7,172.16 Favourable

The direct labor rate variance is $7,172.16 Favourable

Answer 2

Answer:

b.$7,172.16 favorable

Explanation:

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

std rate          $  13.13

actual rate  $  12.20

actual hours       7,712

difference between actual and standart rate $0.93

As it is positive the variance is favorable as we spend less per hour than standard.

Now, we multiply by the actual hours to get the rate variance:

7,712 hours x $0.93 = $7,172.16