A job was budgeted to require 3 hours of labor per unit at $11.00 per hour.The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500.What is the direct labor rate variance?
A)$27,500 unfavorable.
B)$22,000 favorable.
C)$16,000 unfavorable.
D)$16,000 favorable.
E)$6,000 unfavorable.

Question

Quizplus · Accepted Answer

The direct labor rate variance is calculated as (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate). The actual rate is $269,500 / 22,000 hours = $12.25 per hour. The standard rate is $11.00 per hour. The variance is (22,000 x $12.25) - (22,000 x $11.00) = $269,500 - $242,000 = $27,500 unfavorable.

A Job Was Budgeted to Require 3 Hours of Labor