The following data relate to direct labor costs for the current period:Standard costs9,000 hours at $5.50Actual costs8,500 hours at $5.75What is the direct labor rate variance?
A) $2,250 unfavorable
B) $2,125 unfavorable
C) $2,250 favorable
D) $2,125 favorable

Question

Quizplus · Accepted Answer

Direct labor rate variance can be calculated using the formula:
DL rate variance = (Actual labor rate - Standard labor rate) x Actual hours worked

Given:
Standard labor rate = $5.50 per hour
Actual labor rate = $5.75 per hour
Actual hours worked = 8,500

DL rate variance = (Actual labor rate - Standard labor rate) x Actual hours worked
DL rate variance = ($5.75 - $5.50) x 8,500
DL rate variance = $0.25 x 8,500
DL rate variance = $2,125 unfavorable

Therefore, the direct labor rate variance is $2,125 unfavorable, which corresponds to answer B.

The Following Data Relate to Direct Labor Costs for the Current