Fletcher Company collected the following data regarding production of one of its products.Compute the direct labor rate variance.
A)$80,250 unfavorable.
B)$80,250 favorable.
C)$61,125 favorable.
D)$61,125 unfavorable.
E)$19,125 unfavorablE.Actual cost = $1,100,250;AH * SR = (81,500 * $12.75)= $1,039,125

Question

Fletcher Company collected the following data regarding production of one of its products.Compute the direct labor rate variance. 
A)$80,250 unfavorable. 
B)$80,250 favorable. 
C)$61,125 favorable. 
D)$61,125 unfavorable. 
E)$19,125 unfavorablE.Actual cost = $1,100,250;AH * SR = (81,500 * $12.75)= $1,039,125

Quizplus · Accepted Answer

Direct labor rate variance = (AH x AR) - (AH x SR)
Where AH is actual hours worked, AR is the actual rate paid per hour, and SR is the standard rate per hour.

AH = 81,500
AR = $13.50 (as given in the question)
SR = $12.75 (as given in the question)

Direct labor rate variance = (81,500 x $13.50) - (81,500 x $12.75) = $1,100,250 - $1,039,125 = $61,125 unfavorable.

Fletcher Company Collected the Following Data Regarding Production of One