Use the information below to answer the following question(s).Sawyer Industries Inc.(SII), developed standard costs for direct material and direct labour.In 2019, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container. During July 2020, SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour.
-July's direct manufacturing labour rate variance is
A)$250.00 favourable.
B)$262.50 favourable.
C)$487.50 favourable.
D)$262.50 unfavourable.
E)$250.00 unfavourable.

Question

Use the information below to answer the following question(s).Sawyer Industries Inc.(SII), developed standard costs for direct material and direct labour.In 2019, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container.  During July 2020, SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour.
-July's direct manufacturing labour rate variance is
A)$250.00 favourable. 
B)$262.50 favourable. 
C)$487.50 favourable. 
D)$262.50 unfavourable. 
E)$250.00 unfavourable.

Quizplus · Accepted Answer

The direct manufacturing labour rate variance is calculated as (Actual hours worked x (Standard rate - Actual rate)). If the variance is favourable, it means the actual rate was less than the standard rate, leading to cost savings.

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