Crichton Company The following information is for Crichton Company's July production:
(Round all answers to the nearest dollar.)
Refer to Crichton Company. What is the labor rate variance?
A) $3,480 U
B) $3,480 F
C) $2,800 U
D) $2,800 F

Question

Crichton Company The following information is for Crichton Company's July production:
 (Round all answers to the nearest dollar.)
Refer to Crichton Company. What is the labor rate variance?
A) $3,480 U 
B) $3,480 F 
C) $2,800 U 
D) $2,800 F

Quizplus · Accepted Answer

To find the labor rate variance, we need to calculate the actual hours worked and the actual cost of labor, and then compare it to the expected cost of labor based on the standard rate. From the given information, the actual hours worked were 5,000 and the actual cost of labor was $115,000. The standard rate was $23 per hour. Therefore, the expected cost of labor would have been 5,000 hours x $23 per hour = $115,000. 
Labor rate variance = Actual cost of labor - (Actual hours worked x Standard rate)
Labor rate variance = $115,000 - (5,000 x $23)
Labor rate variance = $2,800 U (unfavorable variance because actual cost of labor is higher than expected based on the standard rate)

Crichton Company the Following Information Is for Crichton Company's July