The direct labour rate variance for March is:
A) $8,000 favourable.
B) $8,000 unfavourable.
C) $48,000 unfavourable.
D) $48,000 favourable.

Question

Quizplus · Accepted Answer

We need to calculate the direct labour rate variance using the formula: (Actual rate paid - Standard rate) x Actual hours worked. 
Actual rate paid = $18 per hour 
Standard rate = $20 per hour 
Actual hours worked = 9,000 hours 
So the variance is: 
($18 - $20) x 9,000 = $-18,000 
This means that the actual rate paid was $2 less than the standard rate, which resulted in $18,000 unfavorable variance.

The Direct Labour Rate Variance for March Is