Question

Budgeted production 1,092 units Actual production 905 units Materials: Standard price per ounce $1.767 Standard ounces per completed unit 12 Actual ounces purchased and used in production 11,186 Actual price paid for materials $22,931 Labor: Standard hourly labor rate $14.92 per hour Standard hours allowed per completed unit 4.0 Actual labor hours worked 4,661 Actual total labor costs $75,741 Overhead: Actual and budgeted fixed overhead $1,189,000 Standard variable overhead rate $28.00 per standard labor hour Actual variable overhead costs $130,508 Overhead is applied on standard labor hours. (Round interim calculations to the nearest cent.) The direct labor rate variance is a.$21,730.60 favorable b.$6,199.13 unfavorable c.$21,730.60 unfavorable d.$6,199.13 favorable

Answer 1

Direct labor rate variance= $6,199.13 unfavorable

Step-by-step explanation:

Giving the following information:

Labor:

Standard hourly labor rate $14.92 per hour

Actual labor hours worked 4,661

Actual total labor costs $75,741

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= 75,741/4,661= $16.25

Direct labor rate variance= (14.92 - 16.25)*4,661

Direct labor rate variance= $6,199.13 unfavorable