Midgley Corporation makes a product whose direct labor standards are 0.8 hours per unit and $22.00 per hour. In April the company produced 6,900 units using 5,250 direct labor-hours. The actual direct labor cost was $113,925.
-The labor rate variance for April is:
A)$1,575 U
B)$1,656 F
C)$1,575 F
D)$1,656 U

Question

Quizplus · Accepted Answer

We can calculate the labor rate variance as follows:
Actual labor cost - (Actual hours worked x Standard labor rate)
= $29,925 - (1,575 x $20)
= $29,925 - $31,500
= $1,575 F

Therefore, the labor rate variance is $1,575 F, Option C.

Midgley Corporation Makes a Product Whose Direct Labor Standards Are