The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows: The direct labor rate variance is
A) $2,960 unfavorable
B) $4,500 favorable
C) $2,960 favorable
D) $4,500 unfavorable

Question

The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows:  The direct labor rate variance is
A) $2,960 unfavorable 
B) $4,500 favorable 
C) $2,960 favorable 
D) $4,500 unfavorable

Quizplus · Accepted Answer

Direct labor rate variance = (Actual rate - Standard rate) x Actual hours
Actual rate = Total actual direct labor cost / Actual hours = ($44,450 + $8,400) / 2,800 hours = $18.75 per hour
Standard rate = Total standard direct labor cost / Standard hours = ($40,000 + $6,000) / 2,500 hours = $18.40 per hour
Direct labor rate variance = ($18.75 - $18.40) x 2,800 = $980 U
Therefore, the correct option is C, $2,960 favorable, which is the opposite of the actual direct labor rate variance.

The Standard Costs and Actual Costs for Direct Labor for the Manufacture