The following data relate to direct labor costs for the current period: $\begin{array}{lrr}
\text { 9,000 hours at $ \$ 5.50 $ } &\text {Standard costs}\
\text {8.750 hours at $ \$ 5.25 $ } & \text {Actual costs}\
\end{array}$

What is the direct labor rate variance?
A) $2,250.00 unfavorable
B) $2,187.50 unfavorable
C) $2,250.00 favorable
D) $2,187.50 favorable

Question

The following data relate to direct labor costs for the current period: $\begin{array}{lrr}
  \text { 9,000 hours at $ \$ 5.50 $ } &\text {Standard costs}\
 \text {8.750 hours at $ \$ 5.25 $  } & \text {Actual costs}\
\end{array}$

What is the direct labor rate variance?
A) $2,250.00 unfavorable
B) $2,187.50 unfavorable
C) $2,250.00 favorable
D) $2,187.50 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 (8,750 x $5.25) - (8,750 x $5.50) = $45,937.50 - $48,125 = $2,187.50 favorable.

The Following Data Relate to Direct Labor Costs for the Current