Question

The following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.1 hours Standard labor rate $ 16.20 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 9,200 hours Actual total labor cost $ 146,280 Actual output 910 units What is the labor rate variance for the month?

Answer 1

Answer:

Labor Rate Variance = $2,760 Favorable

Explanation:

Provided information,

Standard Labor hours per unit = 9.1 hours

Standard rate per hour = $16.20

Actual hours = 9,200

Actual Cost = $146,280

Labor Rate Variance = (Standard Rate - Actual Rate) $\times$ Actual Hours

Opening brackets,

Standard Rate $\times$ Actual Hours - Actual Rate $\times$ Actual Hours

= $16.20 $\times$ 9,200 - $146,280

= $149,040 - $146,280

= $2,760

Since value is positive as actual rate is less than standard the variance is favorable.

Final Answer

Labor Rate Variance = $2,760 Favorable