Given the following information in standard costing:
$$\begin{array} { | l | l | }
\hline \text { Standard } & 16,000 \text { hours at } \$ 4.00 \
\hline \text { Actual } & 15,800 \text { hours at } \$ 4.20 \
\hline
\end{array}$$What is the labor rate variance?
A) $3,160 favorable.
B) $3,160 unfavorable.
C) $2,360 favorable.
D) $2,360 unfavorable.

Question

Given the following information in standard costing: 
$$\begin{array} { | l | l | } 
\hline \text { Standard } & 16,000 \text { hours at } \$ 4.00 \
\hline \text { Actual } & 15,800 \text { hours at } \$ 4.20 \
\hline
\end{array}$$What is the labor rate variance?
A) $3,160 favorable.
B) $3,160 unfavorable.
C) $2,360 favorable.
D) $2,360 unfavorable.

Quizplus · Accepted Answer

To calculate the labor rate variance, we need to compare the actual hourly wage paid to the standard hourly wage rate. In the table provided, the actual hourly wage paid is $14.50 per hour and the standard hourly wage rate is $12 per hour. 
Labor rate variance = (Actual hourly wage rate - Standard hourly wage rate) x Actual hours worked 
= ($14.50 - $12) x 2,000 hours 
= $5,000 unfavorable 
Therefore, the correct answer is B ($3,160 unfavorable).

Given the Following Information in Standard Costing What Is the Labor Rate Variance? A) $3,160 Favorable

Given the Following Information in Standard Costing What Is the Labor Rate Variance?
A) $3,160 Favorable