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. Direct labor haurs used $\quad 4,950 $ hours
Total cost of direct labor $\quad \$ 53,460$
Number of good urits produced $\quad 9,000 $units
A) $4,500 (U)
B) $4,500 (F)
C) $3,960 (F)
D) $3,960 (U)

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. Direct labor haurs used  $\quad 4,950 $ hours
Total cost of direct labor $\quad \$ 53,460$
Number of good urits produced $\quad 9,000 $units
A) $4,500 (U)
B) $4,500 (F)
C) $3,960 (F)
D) $3,960 (U)

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 4,950\quad 4,950 4,950 Hours Total Cost of Direct Labor

Using the Labor Time Standard of 0 $\quad 4,950$ Hours
Total Cost of Direct Labor