Question

​Mike's Service Station performs oil changes for cars. Each oil change has a standard time of 0.4 direct labor hours. The standard direct labor hour rate is $ 19.00 per hour. Data relating to oil changes for the month of September​ follow: Actual number of oil changes performed 2 comma 400 Actual direct labor hours worked 900 Actual total direct labor cost $ 4 comma 500 What is the labor rate variance for​ September?

Answer 1

Direct labor rate variance= $12,600 favorable

Step-by-step explanation:

Giving the following information:

The standard direct labor hour rate is $ 19.00 per hour.

Actual direct labor hours worked 900

Actual total direct labor cost $4,500

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= 4,500/900= $5

Direct labor rate variance= (19 - 5)*900

Direct labor rate variance= $12,600 favorable