Question

The following labor standards have been established for a particular product: Standard labor-hours per unit of output 8.0 hours Standard labor rate $ 15.50 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 10,100 hours Actual total labor cost $ 154,025 Actual output 1,200 units What is the labor rate variance for the month? Multiple Choice $300 F $2,525 F $2,525 U $300 U

Answer 1

Answer:

$2525 Favorable.

Explanation:

Labor Rate Variance is calculated as

Budgeted Labor Cost (10,100 hours * $15.5 per hour)  = $156,550.

Actual Labor Cost is $154,025

Labor Rate Variance = ($156,550 - $154,025) $2525 Favorable.

The actual hours are multiplied by the budgeted rate per labor hour which gives the Budgeted labor cost which is then subtracted from the actual labor cost given in the question which provides with the variance of $2525 Favorable.