The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows: The amount of the direct labor rate variance is:
A) $2,960 unfavorable
B) $4,500 favorable
C) $2,960 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:  The amount of the direct labor rate variance is:
A) $2,960 unfavorable 
B) $4,500 favorable 
C) $2,960 favorable 
D) $4,500 unfavorable

Quizplus · Accepted Answer

Direct Labor Rate Variance = (Actual Rate - Standard Rate) x Actual Hours

Actual Rate = $36,520 / 3,200 hours = $11.41 per hour
Standard Rate = $11 per hour

Direct Labor Rate Variance = ($11.41 - $11) x 2,500 = $1,025 unfavorable

Since the variance is unfavorable, the answer choices are either A or D. However, we can see that neither of these options matches the calculation above. Therefore, the correct answer must be C, $2,960 favorable. It's important to double-check calculations and answer choices to avoid errors.

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