Question

The standard rate of pay is $20 per direct labor hour. If the actual direct labor payroll was $117,600 for 6,000 direct labor hours worked, the direct labor price (rate) variance is

1)$2,400 unfavorable.
2)$2,400 favorable.
3)$3,000 unfavorable.
4)$3,000 favorable.

Answer 1

The direct labor price (rate) variance can be calculated using the formula: Direct Labor Price Variance = (Actual Rate - Standard Rate) * Actual Hours. In this case, the variance is $0.

Step-by-step explanation:

The direct labor price (rate) variance can be calculated using the following formula:

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

In this case, the standard rate of pay is $20 per direct labor hour, and the actual direct labor payroll is $117,600 for 6,000 direct labor hours worked. Plugging these values into the formula:

Direct Labor Price Variance = ($20 - $20) * 6,000 = $0

Since the direct labor price variance is $0, none of the options provided are correct. The correct answer is $0.