If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual is 600 hours at $17, the rate variance is $1,200 favorable.

Question

Quizplus · Accepted Answer

To calculate the rate variance, we need to compare the actual rate per hour with the standard rate per hour. 
Standard rate per hour = $15
Actual rate per hour = $17
The difference between these rates is unfavorable since the actual rate is higher than the standard rate. 
Formula for rate variance = (Actual rate - Standard rate) x Actual hours worked
= ($17 - $15) x 600 = $1,200 unfavorable
Therefore, the answer is B) False.

If the Standard to Produce a Given Amount of Product