Dover Enterprises recently used 14,000 labor hours to produce 7,500 completed units.According to manufacturing specifications,each unit is anticipated to take two hours to complete.The company's actual payroll cost amounted to $158,200.If the standard labor cost per hour is $11,Dover's labor rate variance is:
A)$4,200U.
B)$4,000F.
C)$4,300U.
D)$4,300F.
E)None of thesE.

Question

Quizplus · Accepted Answer

The labor rate variance is calculated as (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate). Here, the actual rate is $158,200 / 14,000 hours = $11.30. The variance is (14,000 x $11.30) - (14,000 x $11) = $158,200 - $154,000 = $4,200 Unfavorable (U).

Dover Enterprises Recently Used 14,000 Labor Hours to Produce 7,500