Question

The Ticktock Corporation produces clocks. According to company​ standards, it should take 2 hours of direct labor to produce a clock.​ Ticktock's standard labor cost is​ $10 per hour. During​ June, Ticktock produced​ 5,600 stopwatches and used​ 14,000 hours of direct labor at a total cost of​ $266,000. What is​ Ticktock's direct labor rate variance for​ June?

Answer 1

Direct labor rate variance= $126,000 unfavorable

Step-by-step explanation:

Giving the following information:

Ticktock's standard labor cost is​ $10 per hour.

During​ June, Ticktock used​ 14,000 hours of direct labor at a total cost of​ $266,000.

To calculate the direct labor rate variance, we need to use the following formula:

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Actual rate= 266,000/14,000= 19

Direct labor rate variance= (10 - 19)*14,000= $126,000 unfavorable