The standard rate of pay is $20 per direct labor hour. If the actual direct labor payroll was $117600 for 6000 direct labor hours worked the direct labor price (rate) variance is
A) $2400 unfavorable.
B) $2400 favorable.
C) $3000 unfavorable.
D) $3000 favorable.

Question

Quizplus · Accepted Answer

The direct labor price (rate) variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. The actual rate is $117600 / 6000 hours = $19.6 per hour. The variance is ($19.6 - $20) x 6000 = -$0.4 x 6000 = -$2400, which is favorable because the actual rate is less than the standard rate.

The Standard Rate of Pay Is $20 Per Direct Labor