The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows: $\begin{array}{ll}
\text { StandardCosts } \
7,500 \text { hours } \$ 12 & \text { Directlabor } \
\
\text { Actual Costs } \
7,400 \text { hours } \$ 11.40 & \text { Direct labor }
\end{array}$
The amount of the direct labor rate variance is:
A) $4,440 unfavorable.
B) $4,500 favorable.
C) $4,440 favorable.
D) $4,500 unfavorable.

Question

The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows: $\begin{array}{ll}
\text { StandardCosts } \
7,500 \text { hours } \$ 12 & \text { Directlabor } \
\
\text { Actual Costs } \
7,400 \text { hours } \$ 11.40 & \text { Direct labor }
\end{array}$
 The amount of the direct labor rate variance is:
A) $4,440 unfavorable.
B) $4,500 favorable.
C) $4,440 favorable.
D) $4,500 unfavorable.

Quizplus · Accepted Answer

The direct labor rate variance is calculated as (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate). Here, it is (7,400 x $11.40) - (7,400 x $12) = $84,360 - $88,800 = $4,440 favorable.

The Standard Costs and Actual Costs for Direct Labor for the Manufacture