Question

The following information describes a company’s usage of direct labor in a recent period. The total direct labor cost variance is:
Actual hours used 45,000
Actual rate per hour $15.00
Standard rate per hour $14.50
Standard hours for units produced 47,000

a. $22,500 unfavorable.
b. $22,500 favorable.
c. $6,500 favorable.
d. $29,000 favorable.
e. $6,500 unfavorable.

Answer 1

Answer:

Direct labor rate variance= $22,500 unfavorable

Explanation:

Giving the following information:

Actual hours used 45,000

Actual rate per hour $15.00

Standard rate per hour $14.50

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

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

Direct labor rate variance= (14.5 - 15)*45,000

Direct labor rate variance= $22,500 unfavorable