Use the following information to answer the next question(s):
The standard cost sheet for one of the Vitton Company's products is presented below.
*Rate based on expected activity of 12,000 hours
The following results for last year were recorded.

-The labour rate variance is
A) $5,250 favourable.
B) $5,250 unfavourable.
C) $5,000 favourable.
D) $5,000 unfavourable.

Question

Use the following information to answer the next question(s):
The standard cost sheet for one of the Vitton Company's products is presented below.
  *Rate based on expected activity of 12,000 hours
The following results for last year were recorded.
 
-The labour rate variance is
A) $5,250 favourable. 
B) $5,250 unfavourable. 
C) $5,000 favourable. 
D) $5,000 unfavourable.

Quizplus · Accepted Answer

Labour rate variance = (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate)
= (11,500 x $0.50) - (11,500 x $0.45)
= $5,750 - $5,250
= $500 unfavourable
Therefore, the labour rate variance is $500 unfavourable, which means that the actual labour rate paid was higher than the standard labour rate. Hence, the correct answer is B.

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