Question

Andover LLC recently used 19,000 labor hours to produce 6,800 completed units. According to manufacturing specifications, each unit is anticipated to take two hours to complete. The company's actual payroll cost amounted to $214,700. If the standard labor cost per hour is $11.2, Andover’s labor rate variance is:a.) $582U.
b.) $5,000F.
c.) $582F.
d.) $5,200U.
e.) $5,200F.
f.) None of these.

Answer 1

Answer:

f.) None of these.

Direct Labor Rate variance=1900 unfavorable

Explanation:

Andover LLC

Actual labor hours = 19,000

Completed Units = 6800

Actual Payroll = $ 214,700

Actual Rate = $ 214,700/ 19,000= $ 11.3

Standard Rate $ 11.2

Formula

Direct Labor Rate variance= (actual hours* actual rate)- (actual hours * standard rate)

Direct Labor Rate variance=(19000) 11.3-11.2= 19000 *0.1= 1900 unfavorable

The direct labor rate variance is unfavorable because the actual rate is higher than the standard rate.