Question

"When auto manufacturer BMW purchased the Rollsminus Royce brand​ name, BMW had to hire and train a new staff of assembly workers. The new workers were paid​ $27 per​ hour, worked a total of​ 7,200 hours, and produced​ 2,100 cars. BMW budgeted for a standard labor rate of​ $32 per hour and 3.50 direct labor hours per car. What is the direct labor rate variance for the Rollsminus Royce ​division?"

Answer 1

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Step-by-step explanation:

With regards to the above, direct labor rate variance is computed as;

Direct labor rate variance

= Actual cost - Standard cost of actual hours

= [(7,200hours × $27) - (7,200 hours × $32)]

= $194,400 - $230,400

= $36,000 favorable

Therefore , direct labor rate variance i s $36,000 favorable