Question

Gotay corporation's standard wage rate is $12.00 per direct labor-hour (dlh) and according to the standards, each unit of output requires 5.8 dlhs. in december, 4,900 units were produced, the actual wage rate was $11.00 per dlh, and the actual hours were 27,870 dlhs. the labor rate variance for december would be recorded as a:

Answer 1

The labor rate variance for Gotay Corporation in December is a favorable $32,310, indicating that actual labor costs were lower than the standard costs.

Step-by-step explanation:

The labor rate variance for Gotay Corporation in December would be calculated as the difference between the actual cost of labor and the standard cost of labor based on the standard wage rate. To get the actual cost, we multiply the actual hours worked by the actual rate: 27,870 dlhs × $11.00/dlh = $306,570. The standard cost is calculated by multiplying the total hours that should have been worked for the actual units produced by the standard rate: 4,900 units × 5.8 dlhs/unit × $12.00/dlh = $338,880.

The labor rate variance is the actual cost minus the standard cost: $306,570 - $338,880 = -$32,310. This is a favorable variance because the actual cost is less than the standard cost, indicating that labor was less expensive than anticipated.