Assembly line workers at Thompson Manufacturing worked a total of 12,000 direct labor hours to produce 36,000 units.The standard for producing one unit is 15 minutes at a wage rate of $10.00.If the actual wage rate was $10.50 per direct labor hour, Thompson's direct labor rate variance is
A)$6,000 favorable
B)$6,000 unfavorable
C)$4,500 favorable
D)$4,500 unfavorable

Question

Quizplus · Accepted Answer

The direct labor rate variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. Here, it is ($10.50 - $10.00) x 12,000 = $6,000 unfavorable.

Assembly Line Workers at Thompson Manufacturing Worked a Total of 12,000