Question

In: Accounting

Given the following information in standard costing: Standard 19,400 hours at $7.40 Actual 19,200 hours at...

Given the following information in standard costing:

Standard 19,400 hours at $7.40
Actual 19,200 hours at $7.20

What is the direct labor rate variance?

Multiple Choice

  • $3,840 Unfavorable

  • $3,840 Favorable

  • $2,860 Unfavorable

  • $2,860 Favorable

Solutions

Expert Solution

WORKING NOTES:
Standard Cost Actual Cost
Standard Time Std. Rate Total Cost Actual Time Act. Rate Actual Cost
19400 $               7.40 $               1,43,560 19200 $            7.20 $               1,38,240
Hrs Per Hours Hrs Per Hours
SOLUTION :
Labour Rate Variance =                        (Actual Rate            -            Standard Rate      ) X                     Actual Hours
Labour Rate Variance =                 ( $                        7.20 '-' $                        7.40 ) X                       19,200
Labour Rate Variance =                  $                        0.20 X                        19,200
Labour Rate Variance =                  3840 (favorable)
Answer = Option 2 = $ 3,840 (Favourable)

ekkarill92 answered 1 year ago
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