Blue Box Beach Chairs has the following standards to make beach chairs: $$\begin{array} { l c c }
& \text { Standard Quantity } & \text { Standard Price } \
\text { Direct materials } & 2.2 \text { pounds of polywood per chair } & \$ 3.50 \text { per pound } \
\text { Direct labor } & 0.65 \text { hours per chair } & \$ 13.00 \text { per hour }
\end{array}$$ The static budget was based on the production of 6,200 beach chairs.The company used 13,000 pounds of polywood in order to make 6,000 chairs in April.The company purchased 7,000 pounds of polywood at a total cost of $24,150.It also used 3,840 labor hours at a cost of $12.70 per hour.How much is the direct labor rate variance?
A)$1,932 unfavorable
B)$1,152 favorable
C)$780 favorable
D)$2,470 favorable

Question

Blue Box Beach Chairs has the following standards to make beach chairs: $$\begin{array} { l c c } 
& \text { Standard Quantity } & \text { Standard Price } \
\text { Direct materials } & 2.2 \text { pounds of polywood per chair } & \$ 3.50 \text { per pound } \
\text { Direct labor } & 0.65 \text { hours per chair } & \$ 13.00 \text { per hour }
\end{array}$$ The static budget was based on the production of 6,200 beach chairs.The company used 13,000 pounds of polywood in order to make 6,000 chairs in April.The company purchased 7,000 pounds of polywood at a total cost of $24,150.It also used 3,840 labor hours at a cost of $12.70 per hour.How much is the direct labor rate variance?
A)$1,932 unfavorable
B)$1,152 favorable
C)$780 favorable
D)$2,470 favorable

Quizplus · Accepted Answer

The direct labor rate variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. The actual rate is $12.70 per hour, the standard rate is $13.00 per hour, and the actual hours are 3,840. Thus, the variance is (12.70 - 13.00) x 3,840 = -0.30 x 3,840 = $1,152 favorable.

Blue Box Beach Chairs Has the Following Standards to Make