The following data relate to direct labor costs for the current period:
Standard costs 6,000 hours at $12.00
Actual costs 7,500 hours at $11.60
What is the direct labor rate variance?
Answer
A.$15,000 unfavorable
B.$3,000 favorable
C.$17,400 unfavorable
D.$2,400 favorable
Direct labor rate variance
(AR-SR)AH
(11.6-12)(7500)
= $ 3,000 favorable
The following data relate to direct labor costs for the current period:
standard cost36000hours $22
actual cost 35000hours $23
What is the direct labor time variance?
To calculate the direct labor rate variance, we need to compare the actual labor rate to the standard labor rate and determine the difference.
The standard labor rate is $12.00 per hour, and the actual labor rate is $11.60 per hour.
To find the direct labor rate variance, we use the formula:
Direct Labor Rate Variance = (Actual Hours × Actual Rate) - (Actual Hours × Standard Rate)
Let's substitute the values into the formula:
Direct Labor Rate Variance = (7,500 × $11.60) - (7,500 × $12.00)
Simplifying the equation:
Direct Labor Rate Variance = $87,000 - $90,000
Direct Labor Rate Variance = -$3,000 unfavorable
Therefore, the answer is Option A: $15,000 unfavorable.
To calculate the direct labor rate variance, we need to compare the standard labor rate to the actual labor rate.
The standard labor rate is $12.00 per hour, and the actual labor rate is $11.60 per hour.
To find the variance, we subtract the actual labor rate from the standard labor rate and then multiply it by the actual hours worked:
Variance = (Standard Rate - Actual Rate) * Actual Hours
Variance = ($12.00 - $11.60) * 7,500 hours
Variance = $0.40 * 7,500 hours
Variance = $3,000
Since the variance is positive, it means that the actual labor rate is lower than the standard labor rate, resulting in cost savings.
Therefore, the correct answer is:
B. $3,000 favorable