If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17, the rate variance was $1,200 favorable.

Question

Quizplus · Accepted Answer

The information given only allows us to calculate the labor rate variance, which is calculated as (actual rate - standard rate) x actual hours. Using the given information, the labor rate variance would be calculated as ($17 - $15) x 600 = $1,200 unfavorable, not favorable. Therefore, the statement is false.

If the Standard to Produce a Given Amount of Product