Question

Hardigree Corporation makes a product that has the following direct labor standards:
Standard direct labor-hours 0.3 hours per unit
Standard direct labor rate $ 23.00 per hour

In May the company's budgeted production was 8,900 units, but the actual production was 8,800 units. The company used 2,820 direct labor-hours to produce this output. The actual direct labor cost was $70,218.

The labor rate variance for May is:

(A) $5,016 U
(B) $5,358 U
(C) $5,016 F
(D) $5,358 F

Answer 1

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Hardigree Corporation makes a product that has the following direct labor standards:

Standard direct labor-hours 0.3 hours per unit

Standard direct labor rate $ 23.00 per hour

In May the company's budgeted production was 8,900 units, but the actual production was 8,800 units. The company used 2,820 direct labor-hours to produce this output. The actual direct labor cost was $70,218.

Actual rate= 70,218/2,820= 24.9

Direct labor price variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor price variance= (23 - 24.9)*2,820= 5,358 unfavorable