Assembly line workers at Thompson Manufacturing worked a total of 9,300 direct labor hours to produce 36,000
A)$2,000 favorable
B)$3,000 favorable
C)$3,150 unfavorable
D)$4,500 unfavorable

Question

Quizplus · Accepted Answer

To calculate the labor rate variance, we need to compare the actual rate per hour worked to the standard rate per hour. Let's assume the standard rate is $20/hour. Then, the total labor cost should have been:
Standard rate x Actual labor hours worked = $20/hour x 9,300 = $186,000

However, the company actually incurred a labor cost of $189,150:
Actual rate x Actual labor hours worked = Actual labor cost
Actual rate = Actual labor cost / Actual labor hours worked = $189,150 / 9,300 = $20.33/hour

So, the labor rate variance is:
Actual labor cost - (Standard rate x Actual labor hours worked) = $189,150 - ($20/hour x 9,300) = $3,150 unfavorable.

Therefore, the best choice is C, which represents the unfavorable labor rate variance of $3,150.

Assembly Line Workers at Thompson Manufacturing Worked a Total of 9,300