Asked by Haley Ochocinski on Apr 27, 2024
Verified
The labor rate variance for July is:
A) $764 F
B) $764 U
C) $840 U
D) $840 F
Labor Rate Variance
The difference between the actual cost of labor and the budgeted or standard cost, reflecting inefficiencies in wage rate management.
July
The seventh month of the Gregorian calendar, typically associated with the height of summer in the northern hemisphere.
- Understand how to calculate labor rate variance.
- Catalog the factors that contrast a favorable (F) variance from an unfavorable (U) one.
Verified Answer
SS
ShaVonte' SamuelMay 02, 2024
Final Answer :
B
Explanation :
The labor rate variance is calculated as the difference between the actual labor rate and the standard labor rate, multiplied by the actual hours worked. Using the given data, the actual labor rate was $12 per hour ($3,000 ÷ 250), while the standard labor rate was $10 per hour. This gives a labor rate variance of $2 per hour. To find the total labor rate variance, this needs to be multiplied by the actual hours worked, which was 382.5. Thus, the labor rate variance for July is $765 unfavorable (U), which rounds to $764 U.
Explanation :
Labor rate variance = AH × (AR − SR)
= 1,910 hours × ($11.40 per hour − $11.00 per hour)
= 1,910 hours × ($0.40 per hour)
= $764 U
= 1,910 hours × ($11.40 per hour − $11.00 per hour)
= 1,910 hours × ($0.40 per hour)
= $764 U
Learning Objectives
- Understand how to calculate labor rate variance.
- Catalog the factors that contrast a favorable (F) variance from an unfavorable (U) one.