Question

Pochard Paints manufactures artist’s oil paints. Each 40 ml tube of paint requires 5 minutes of direct labor, and the standard labor rate is $9 per direct labor hour. In September, Pochard incurred 10,800 direct labor hours at a cost of $95,000 to produce 120,000 tubes of paint. Calculate Pochard’s direct labor rate variance for September.

Answer 1

Direct labor rate variance= $2,160 favorable

Step-by-step explanation:

Giving the following information:

Each 40 ml tube of paint requires 5 minutes of direct labor, and the standard labor rate is $9 per direct labor hour. In September, Pochard incurred 10,800 direct labor hours for $95,000 to produce 120,000 tubes of paint.

To calculate the Direct Labor rate variance we need to use the following formula:

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

SR= 9

AR= ($95,000/10,800)= $8.80

AQ= 10,800

Direct labor rate variance= (9 - 8.8)*10,800= 2,160 favorable