Question

Japan company produces lamps that require 2 standard hours per unit at a standard hourly rate of $19.00 per hour. production of 5,900 units required 12,150 hours at an hourly rate of $19.60 per hour. what is the direct labor rate variance? enter favorable variances as negative numbers.

Answer 1

The direct labor rate variance for the Japan company is an unfavorable $7,290, calculated by multiplying the actual labor hours by the difference in standard and actual rates.

Step-by-step explanation:

The direct labor rate variance is calculated by comparing the standard cost of labor to the actual cost. To compute this, we multiply the actual hours worked by the difference between the standard rate and the actual rate. In this case, the student's company had a standard rate of $19.00 per hour but ended up paying $19.60 per hour.

Here's how the calculation works:

• Actual hours worked: 12,150 hours
• Difference in rates: $19.60 actual rate - $19.00 standard rate = $0.60
• Labor rate variance: 12,150 hours x $0.60 = $7,290

Since the actual rate is higher than the standard rate, this is an unfavorable variance, so the final answer is:

$7,290 unfavorable variance