Question

The following labor standards have been established for a particular product:

Standard labor-hours per unit of output 8.1 hours
Standard labor rate $14.40 per hour

The following data pertain to operations concerning the product for the last month:

Actual hours worked 8,700 hours
Actual total labor cost $129,195
Actual output 1,000 units

What is the labor rate variance for the month?

a. $3,915 U
b. $450 U
c. $3,915 F
d. $450 F

Answer 1

Direct labor rate variance= $3,915 unfavorable

Step-by-step explanation:

Giving the following information:

Standard labor rate $14.40 per hour

Actual hours worked 8,700 hours

Actual total labor cost $129,195

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

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

Actual rate= 129,195/8,700= 14.85

Direct labor rate variance= (14.4 - 14.85)*8,700

Direct labor rate variance= $3,915 unfavorable