Asked by caglar gokbulut on May 19, 2024
Verified
The following data relate to direct labor costs for the current period:Standard costs9,000 hours at $5.50Actual costs8,500 hours at $5.75What is the direct labor rate variance?
A) $2,250 unfavorable
B) $2,125 unfavorable
C) $2,250 favorable
D) $2,125 favorable
Direct Labor Costs
The wages and related expenses for employees who are directly involved in the production of goods or services.
Rate Variance
The difference between the standard cost and the actual cost based on the rate of an input.
- Familiarize with the calculation procedures for direct labor variance, including aspects of labor rate and labor time variance.
- Interpret the relevance of advantageous and adverse variances in the expenses related to labor and materials.
Verified Answer
SE
Sylvia ElenaMay 19, 2024
Final Answer :
B
Explanation :
Direct labor rate variance can be calculated using the formula:
DL rate variance = (Actual labor rate - Standard labor rate) x Actual hours worked
Given:
Standard labor rate = $5.50 per hour
Actual labor rate = $5.75 per hour
Actual hours worked = 8,500
DL rate variance = (Actual labor rate - Standard labor rate) x Actual hours worked
DL rate variance = ($5.75 - $5.50) x 8,500
DL rate variance = $0.25 x 8,500
DL rate variance = $2,125 unfavorable
Therefore, the direct labor rate variance is $2,125 unfavorable, which corresponds to answer B.
DL rate variance = (Actual labor rate - Standard labor rate) x Actual hours worked
Given:
Standard labor rate = $5.50 per hour
Actual labor rate = $5.75 per hour
Actual hours worked = 8,500
DL rate variance = (Actual labor rate - Standard labor rate) x Actual hours worked
DL rate variance = ($5.75 - $5.50) x 8,500
DL rate variance = $0.25 x 8,500
DL rate variance = $2,125 unfavorable
Therefore, the direct labor rate variance is $2,125 unfavorable, which corresponds to answer B.
Learning Objectives
- Familiarize with the calculation procedures for direct labor variance, including aspects of labor rate and labor time variance.
- Interpret the relevance of advantageous and adverse variances in the expenses related to labor and materials.