-The direct labor rate variance is
A) $5,490 unfavorable
B) $5,490 favorable
C) $33,000 favorable
D) $33,000 unfavorable

Question

-The direct labor rate variance is
A) $5,490 unfavorable 
B) $5,490 favorable 
C) $33,000 favorable 
D) $33,000 unfavorable

Quizplus · Accepted Answer

The direct labor rate variance is calculated as the difference between the actual cost of labor and the expected (or standard) cost of labor, adjusted for the actual hours worked. A favorable variance occurs when the actual labor cost is less than the expected labor cost, indicating cost savings. Therefore, if the variance is described as favorable, it means the actual costs were lower than expected, which matches choice B.

-The Direct Labor Rate Variance Is