Question

The following data are given for Harry Company: Budgeted production 1,079 units Actual production 936 units Materials: Standard price per ounce $1.91 Standard ounces per completed unit 10 Actual ounces purchased and used in production 9,641 Actual price paid for materials $19,764 Labor: Standard hourly labor rate $14.04 per hour Standard hours allowed per completed unit 4.8 Actual labor hours worked 4,820 Actual total labor costs $78,325 Overhead: Actual and budgeted fixed overhead $1,156,000 Standard variable overhead rate $27.00 per standard labor hour Actual variable overhead costs $134,960 Overhead is applied on standard labor hours. (Round interim calculations to the nearest cent.) The direct labor rate variance is

Answer 1

Direct labor rate variance= $10,652.2 unfavorable

Step-by-step explanation:

Giving the following information:

Labor: Standard hourly labor rate $14.04 per hour

Actual labor hours worked 4,820

Actual total labor costs $78,325

To calculate the direct labor rate variance, we need to use the following formula:

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

Actual rate= 78,325/4,820= $16.25

Direct labor rate variance= (14.04 - 16.25)*4,820

Direct labor rate variance= $10,652.2 unfavorable