The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows: Standard Costs
Direct labor$\quad $$\quad $$\quad $$\quad $7,500 hours @ $ \$ 12 $

Actual Costs
Direct labor$\quad $$\quad $$\quad $$\quad $7,400 hours $ @ \$ 11.40 $
? The amount of the direct labor rate variance is:
A) $4,440 unfavorable.
B) $4,500 favorable.
C) $4,440 favorable.
D) $4,500 unfavorable.

Question

The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows: Standard Costs
Direct labor$\quad $$\quad $$\quad $$\quad $7,500 hours @ $ \$ 12 $

Actual Costs
Direct labor$\quad $$\quad $$\quad $$\quad $7,400 hours $ @ \$ 11.40 $
 ? The amount of the direct labor rate variance is:
A) $4,440 unfavorable.
B) $4,500 favorable.
C) $4,440 favorable.
D) $4,500 unfavorable.

Quizplus · Accepted Answer

Direct Labor Rate Variance = (Standard Rate - Actual Rate) x Actual Hours

Standard Rate = $15 per hour
Actual Rate = $14 per hour
Actual Hours = 10,000

Direct Labor Rate Variance = ($15 - $14) x 10,000
Direct Labor Rate Variance = $10,000 favorable

Therefore, the correct answer is C) $4,440 favorable.

The Standard Costs and Actual Costs for Direct Labor for the Manufacture