Question

Assume the following information appears in the standard cost card for a company that makes only one product: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 5 pounds $ 11.00 per pound $ 55.00 Direct labor 2 hours $ 18.30 per hour $ 36.60 Variable manufacturing overhead 2 hours $ 3.00 per hour $ 6.00 During the most recent period, the following additional information was available: 20,000 pounds of material was purchased at a cost of $10.50 per pound. All of the material that was purchased was used to produce 3,900 units. 8,000 direct labor-hours were recorded at a total cost of $132,000. What is the direct labor rate variance

Answer 1

Direct labor rate variance= $14,400 favorable

Step-by-step explanation:

Giving the following information:

Direct labor 2 hours $ 18.30 per hour $ 36.60

8,000 direct labor hours were recorded at a total cost of $132,000

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

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

Direct labor rate variance= (18.3 - 16.5)*8,000

Direct labor rate variance= $14,400 favorable

Actual rate= 132,000/8,000= $16.5