Assembly line workers at Thompson Manufacturing worked a total of 12,000 direct labor hours to produce 36,000 units.The standard for producing one unit is 15 minutes at a wage rate of $10.70.If the actual wage rate was $10.50 per direct labor hour, Thompson's direct labor rate variance is
A)$2,400 favorable
B)$4,800 unfavorable
C)$9,450 favorable
D)$4,500 unfavorable

Question

Quizplus · Accepted Answer

The direct labor rate variance is calculated as (Actual Hourly Rate - Standard Hourly Rate) x Actual Hours Worked. Here, it's ($10.50 - $10.70) x 12,000 = -$0.20 x 12,000 = -$2,400, which is favorable because the actual rate is less than the standard rate.

Assembly Line Workers at Thompson Manufacturing Worked a Total of 12,000