Question

The davidson corporation produces clock. According to company standards, it should take 2 hours of direct labor to produce a clock. Davidson standard labor cost is 19 per hour. During june thomas produced 6200 clocks and used 13500 hours of direct labor at a total of 260000. What is thomas direct labor rate variance for june?

Answer 1

$3,500 Unfavorable

Step-by-step explanation:

Direct Labor Rate Variance = (Standard Rate - Actual Rate)
`*` Actual Hours

Provided information, we have

Standard hours per unit = 2

Standard hours for actual output = 2
`*` 6,200 = 12,400 hours

Standard rate = $19 per hour

Actual rate = $260,000/13,500 = $19.259

Standard Rate
`*` Actual Hours

= $19
`*` 13,500 = $256,500

Actual Cost = $260,000

Variance = $256,500 - $260,000 = - $3,500 Unfavorable

Since value is negative as actual labor cost is more than standard cost for actual hours, the variance is unfavorable.