Asked by Anthony Rabbit on May 14, 2024
Verified
The following data relate to direct labor costs for August:Actual costs: 5,500 hours at $24.00 per hourStandard costs: 5,000 hours at $23.70 per hourWhat is the direct labor rate variance?
A) $1,650 favorable
B) $1,650 unfavorable
C) $1,500 favorable
D) $1,500 unfavorable
Direct Labor Rate Variance
The cost associated with the difference between the actual rate and the standard rate paid for direct labor multiplied by the actual direct labor hours used in producing a commodity.
Actual Costs
The true amount of money spent on a project or activity, as opposed to estimated or budgeted costs.
- Calculate and interpret direct labor rate and time variances.
Verified Answer
JR
Jenny ReyesMay 19, 2024
Final Answer :
B
Explanation :
To calculate the direct labor rate variance, we use the formula:
Direct Labor Rate Variance = (Actual Rate - Standard Rate) x Actual Hours
Plugging in the given values, we get:
Direct Labor Rate Variance = ($24.00 - $23.70) x 5,500
Direct Labor Rate Variance = $0.30 x 5,500
Direct Labor Rate Variance = $1,650 unfavorable
Therefore, the correct answer is B) $1,650 unfavorable.
Direct Labor Rate Variance = (Actual Rate - Standard Rate) x Actual Hours
Plugging in the given values, we get:
Direct Labor Rate Variance = ($24.00 - $23.70) x 5,500
Direct Labor Rate Variance = $0.30 x 5,500
Direct Labor Rate Variance = $1,650 unfavorable
Therefore, the correct answer is B) $1,650 unfavorable.
Learning Objectives
- Calculate and interpret direct labor rate and time variances.