The standard rate of pay is $12 per direct labor hour. If the actual direct labor payroll was $47040 for 4000 direct labor hours worked the direct labor price (rate) variance is
A) $960 unfavorable.
B) $960 favorable.
C) $1200 unfavorable.
D) $1200 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 $47040 / 4000 hours = $11.76 per hour. The variance is ($11.76 - $12.00) x 4000 = -$960, which is favorable because the actual rate is less than the standard rate.

The Standard Rate of Pay Is $12 Per Direct Labor