The following data relate to direct labor costs for August:Actual costs: 5,500 hours at $24.00 per hourStandard costs: 5,000 hours at $23.70 per hourWhat is the direct labor rate variance?
A) $1,650 favorable
B) $1,650 unfavorable
C) $1,500 favorable
D) $1,500 unfavorable

Question

The following data relate to direct labor costs for August:Actual costs: 5,500 hours at $24.00 per hourStandard costs: 5,000 hours at $23.70 per hour​What is the direct labor rate variance?​
A) ​$1,650 favorable
B) ​$1,650 unfavorable
C) ​$1,500 favorable
D) ​$1,500 unfavorable

Quizplus · Accepted Answer

To calculate the direct labor rate variance, we use the formula:

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

Plugging in the given values, we get:

Direct Labor Rate Variance = ($24.00 - $23.70) x 5,500
Direct Labor Rate Variance = $0.30 x 5,500
Direct Labor Rate Variance = $1,650 unfavorable

Therefore, the correct answer is B) $1,650 unfavorable.

The Following Data Relate to Direct Labor Costs for August:Actual