Using the labor time standard of 0.5 labor hour per unit and a labor cost standard of $10 per labor hour for a 10 pound bag of chocolate and the following actual cost and usage data,compute the direct labor rate variance.
$\begin{array}{ll}
\text { Direct labor hours used } & 4,950 \text { hours } \
\text { Total cost of direct labor } & \$ 53,460 \
\text { Number of good units produced } & 9,000 \text { units }
\end{array}$

Question

Using the labor time standard of 0.5 labor hour per unit and a labor cost standard of $10 per labor hour for a 10 pound bag of chocolate and the following actual cost and usage data,compute the direct labor rate variance. 
$\begin{array}{ll}
\text { Direct labor hours used } & 4,950 \text { hours } \
\text { Total cost of direct labor } & \$ 53,460 \
\text { Number of good units produced } & 9,000 \text { units }
\end{array}$

Quizplus · Accepted Answer

The direct labor rate variance is calculated as (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate). The actual rate is $53,460 / 4,950 hours = $10.80 per hour. The standard rate is $10 per hour. The variance is 4,950 hours x ($10.80 - $10) = $3,960 Unfavorable (U).

Using the Labor Time Standard of 0 A) $4,500 (U) B) $4,500 (F) C) $3,960 (F) D)

Using the Labor Time Standard of 0 A) $4,500 (U)
B) $4,500 (F)
C) $3,960 (F)
D)