Borden Enterprises uses standard costing. For the month of April, the company reported the following data: • Standard direct labor rate: $10 per hour
• Standard hours allowed for actual production: 8,000 hours
• Actual direct labor rate: $9.50 per hour
• Labor efficiency variance: $4,800 Favorable
The labor rate variance for April is:
A)$3,760 U
B)$3,760 F
C)$2,850 F
D)$2,850 U

Question

Quizplus · Accepted Answer

Labor rate variance = (Actual rate - Standard rate) x Actual hours

Actual hours = Standard hours allowed + Labor efficiency variance/Standard labor rate
= 8,000 + ($4,800 / $10)
= 8,480 hours

Labor rate variance = ($9.50 - $10) x 8,480
= $3,760 F (Favorable)

Therefore, the answer is B) $3,760 F.

Borden Enterprises Uses Standard Costing