Use the information below to answer the following question(s).The following data for a pottery company pertain to the production of 2,000 clay pots during July.Direct Materials (all materials purchased were used):
Direct Manufacturing Labour:

-What is the direct manufacturing labour rate variance?
A)$186 favourable
B)$486 unfavourable
C)$486 favourable
D)$672 unfavourable
E)$672 favourable

Question

Use the information below to answer the following question(s).The following data for a pottery company pertain to the production of 2,000 clay pots during July.Direct Materials (all materials purchased were used):
  Direct Manufacturing Labour:
 
-What is the direct manufacturing labour rate variance?
A)$186 favourable 
B)$486 unfavourable 
C)$486 favourable 
D)$672 unfavourable 
E)$672 favourable

Quizplus · Accepted Answer

To calculate the direct manufacturing labour rate variance, we need to first calculate the standard labour rate and then compare it with the actual labour rate.

Standard Labour Rate = Standard Hours x Standard Rate
= 4,000 hours x $14 per hour
= $56,000

Actual Labour Rate = Total actual labour cost ÷ Total actual labour hours
= $54,000 ÷ 3,500 hours
= $15.43 per hour

Therefore, Direct Manufacturing Labour Rate Variance = (Actual Rate - Standard Rate) x Actual Hours

= ($15.43 - $14) x 3,500

= $486 unfavourable

Use the Information Below to Answer the Following Question(s)