The following data relate to direct labor costs for the current period of Executive Inc.: $\begin{array}{lrr}
\text {6,000 hours at $ \$12.00 $ } & \text { Standard costs } \
\text {7,500 hours at $ \$ 11.60 $ } & \text { Actual costs } \
\end{array}$

Refer to the information provided for Executive Inc. What is the direct labor rate variance?
A) $3,000 unfavorable
B) $3,000 favorable
C) $2,400 unfavorable
D) $2,400 favorable

Question

The following data relate to direct labor costs for the current period of Executive Inc.: $\begin{array}{lrr}
  \text {6,000 hours at $ \$12.00 $  } & \text { Standard costs } \
 \text {7,500 hours at $ \$ 11.60 $ } & \text { Actual costs } \
\end{array}$

Refer to the information provided for Executive Inc. What is the direct labor rate variance?
A) $3,000 unfavorable
B) $3,000 favorable
C) $2,400 unfavorable
D) $2,400 favorable

Quizplus · Accepted Answer

The direct labor rate variance is calculated as (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate). Here, it is (7,500 x $11.60) - (7,500 x $12.00) = $87,000 - $90,000 = $3,000 favorable.

The Following Data Relate to Direct Labor Costs for the Current