Question

A job was budgeted to require 5 hours of labor per unit at $12.00 per hour. The job consisted of 8,100 units and was completed in 37,500 hours at a total labor cost of $489,800. What is the direct labor rate variance

Answer 1

3,800 unfavorable

Step-by-step explanation:

A job was budgeted at 5 hours of labour unit at $12 for an hour

The job consists of 8,100 units

It was completed in 37,500 hours

The total labor cost is $489,800

The direct labor rate variance can be calculated as follows

= 5×12×8100

= 486,000

486,000-489,800

= -3,800(since It has a negative sign it is unfavorable)

= 3,800 unfavorable