Question

Consider the following information: Actual direct labor hours 34,500 Standard direct labor hours 35,000 Total actual direct labor cost $241,500 Direct-labor efficiency variance $3,200F The direct-labor rate variance is:

Answer 1

Direct labor rate variance= $20,700 unfavorable

Step-by-step explanation:

Giving the following information:

Actual direct labor hours 34,500

Standard direct labor hours 35,000

Total actual direct labor cost $241,500

Direct-labor efficiency variance $3,200F

First, we need to calculate the standard hourly rate:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

3,200= (35,000 - 34,500)standard rate

3,200 = 500standard rate

$6.4 = standard rate

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= (6.4 - 7)*34,500

Direct labor rate variance= $20,700 unfavorable

Actual rate= 241,500 / 34,500= $7