The following data relate to direct labor costs for the current period: $$\begin{array} { l l }
\text { Standard costs } & 8,850 \text { hours at } \$ 6.50 \
\text { Actual costs } & 7,500 \text { hours at } \$ 6.25
\end{array}$$ ? What is the direct labor rate variance?
A) $1,875.00 unfavorable
B) $2,212.50 unfavorable
C) $1,875.00 favorable
D) $2,212.50 favorable

Question

The following data relate to direct labor costs for the current period: $$\begin{array} { l l } 
\text { Standard costs } & 8,850 \text { hours at } \$ 6.50 \
\text { Actual costs } & 7,500 \text { hours at } \$ 6.25
\end{array}$$ ? What is the direct labor rate variance?
A) $1,875.00 unfavorable
B) $2,212.50 unfavorable
C) $1,875.00 favorable
D) $2,212.50 favorable

Quizplus · Accepted Answer

The direct labor rate variance is calculated as (Actual Hourly Rate - Standard Hourly Rate) * Actual Hours Worked. Here, it is (6.25 - 6.50) * 7,500 = -0.25 * 7,500 = -$1,875.00, indicating a favorable variance because the actual rate is less than the standard rate.

The Following Data Relate to Direct Labor Costs for the Current