Question

Pochard Paints manufactures artist’s oil paints. Each 40 ml tube of paint requires 5 minutes of direct labor, and the standard labor rate is $9 per direct labor hour. In September, Pochard incurred 10,800 direct labor hours at a cost of $95,000 to produce 120,000 tubes of paint. Calculate Pochard’s direct labor rate variance for September. (Round answer to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Answer 1

Direct labor rate variance= $2,160 favorable

Step-by-step explanation:

Giving the following information:

The standard labor rate is $9 per direct labor hour.

In September, Pochard incurred 10,800 direct labor hours for $95,000.

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= 95,000/10,800= $8.80

Direct labor rate variance= (9 - 8.8)*10,800

Direct labor rate variance= $2,160 favorable

It is favorable because the hourly rate was cheaper than estimated.