Question

A job was budgeted to require 5 hours of labor per unit at $11.00 per hour. The job consisted of 8,300 units and was completed in 39,500 hours at a total labor cost of $460,300. What is the direct labor rate variance?

Answer 1

$3800

Step-by-step explanation:

Given that:

• Time = 5 hours

• Cost of labor = $11

• Number of units = 8300

• Total actual labor cost =$460300

So the standard labor cost = 8300 × 5 × $11 = $456500

As we know that, the formula for finding the cost variance:

Total labor cost variance = Standard labor cost - Actual labor cost

<=> $456500 - $460300

<=> -$3800

The total labor cost variance is $3800 unfavorable.

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