Question

Eagle Company uses a standard cost system that has provided the following data: Units of output manufactured 90 Direct labor Standard hours allowed 2 hours per unit of product Standard wage rate $ 15.60 per hour Actual direct labor 200 hours, total cost of $3,520 The direct labor rate variance for the period was: Multiple Choice $712 favorable. $400 favorable. $400 unfavorable. $712 unfavorable.\

Answer 1

Direct labor rate variance= $400 unfavorable

Step-by-step explanation:

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= (15.6 - 17.6)*200

Direct labor rate variance= $400 unfavorable

Actual rate= 3,520 / 200= $17.6