A product's standard cost card specifies that a unit of the product requires 4 direct labor-hours. During September, 3,350 units were made, which was 150 units less than budgeted. The total budgeted direct labor cost for September was $117,600. The direct labor cost incurred during September was $111,850 and 13,450 direct labor-hours were worked.

The labor rate variance for the month was:

a) $5750 F
b) $1130 U
c) $5750 U
d) $1130 F

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facundobuzzetti facundobuzzetti · Answer 1 · 2020-04-20T03:41:56+02:00

Answer:

Direct labor rate variance= $1,130 favorable

Explanation:

Giving the following information:

Standard:

A unit of the product requires 4 direct labor-hours.

Budgeted production= 3,500 units

Budgeted direct labor cost= 117,600

Direct labor rate per hour= 117,600/ (3,500*4)= $8.4 per hour

Actual:

Production= 3,350 units

Direct labor cost= 111,850

Direct labor hours= 13,450

Direct labor rate per hour= 111,850/13,450= $8.31598 per hour

To calculate the direct labor rate variance, we need to use the following formula:

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor rate variance= (8.4 - 8.31598)*13,450

Direct labor rate variance= $1,130 favorable