Wolery Incorporated has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for April:
The labor rate variance for the month is closest to:
A) $2,576 Unfavorable
B) $2,816 Unfavorable
C) $2,816 Favorable
D) $2,576 Favorable

Question

Wolery Incorporated has provided the following data concerning one of the products in its standard cost system.  The company has reported the following actual results for the product for April:
 The labor rate variance for the month is closest to:
A) $2,576 Unfavorable 
B) $2,816 Unfavorable 
C) $2,816 Favorable 
D) $2,576 Favorable

Quizplus · Accepted Answer

The labor rate variance formula is Actual Hours x (Actual Rate - Standard Rate)

Using the given information, we can calculate the actual rate:

Actual Cost / Actual Hours = $36,420 / 2,670 = $13.65/hr

The labor rate variance is:

2,670 x ($13.65 - $14.50) = -$2,280

Since this variance is unfavorable (negative), we need to flip the sign to get the absolute value: $2,280.

Therefore, the labor rate variance for the month is closest to option A, $2,576 Unfavorable.

Wolery Incorporated Has Provided the Following Data Concerning One of the Products