Question

The standard rate of pay is $20 per direct labor hour. If the actual direct labor payroll was $117600 for 6000 direct labor hours worked, the direct labor price (rate) variance is $3000 favorable. $2400 unfavorable. $2400 favorable. $3000 unfavorable.

Answer 1

Direct labour rate variance

= (Standard rate - Actual rate) x Actual hours worked

= ($20 - $19.60) x 6,000 hours

= $2,400(F)

Actual rate = Actual labour cost

Actual hours worked

= $117,600

6,000 hours

= $19.60

Step-by-step explanation:

Direct labour rate variance is the difference between standard rate and actual rate multiplied by actual direct labour hours worked. Actual rate is calculated as the ratio of actual labour cost and actual hours worked.