The correct option is: a) actual costs and the actual hours at the standard rate
The direct labor rate variance is the difference between the actual costs and the actual hours at the standard rate.
The direct labor variance gauges the firm's effectiveness in both using labor and setting labor prices. The direct labor rate variance and the direct labor time variance are the two parts of a labor variance
Variation in direct labor rates
The difference between the actual and average direct labor rates for the hours worked is known as the direct labor rate variance.
The following formula is used to compute the direct labor rate variance:
Because of increased production efficiencies, negligence or inefficiencies in production, or inaccurate estimation when establishing the standard usage, the actual hours used may differ from the standard hours.
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