Question

A job was budgeted to require 3 hours of labor per unit at $8.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000. What is the total labor cost variance?

A. $22,000 unfavorable
B. $16.000 unfavorable.
C. $6,000 unfavorable.
D. $16,000 favorable.

Answer 1

Direct labor rate variance= $22,000 unfavorable

Step-by-step explanation:

Giving the following information:

Standard rate= $8.00 per hour.

Actual= 22,000 hours at a total labor cost of $198,000.

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= 198,000/22,000= $9

Direct labor rate variance= (8 - 9)*22,000

Direct labor rate variance= $22,000 unfavorable