The following labour standards have been established for a particular product:$\begin{array}{ll}
\text { Standard labour hours per unit of output }&9.0 \text { hours }\
\text { Standard labour rate }&£ 15.10 \text { per hour }
\end{array}$

The following data pertain to operations concerning the product for the last month:$\begin{array}{ll}
\text { Actual hours worked } & 8,100 \text { hours } \
\text { Actual total labour cost } & £ 119,880 \
\text { Actual output } & 800 \text { units }
\end{array}$
What is the labour rate variance for the month

A)£11,160 F
B)£13,320 U
C)£11,160 U
D)£2,430 F

Question

The following labour standards have been established for a particular product:$\begin{array}{ll}
\text { Standard labour hours per unit of output }&9.0 \text { hours }\
\text { Standard labour rate }&£ 15.10 \text { per hour }
\end{array}$
 
The following data pertain to operations concerning the product for the last month:$\begin{array}{ll}
\text { Actual hours worked } & 8,100 \text { hours } \
\text { Actual total labour cost } & £ 119,880 \
\text { Actual output } & 800 \text { units }
\end{array}$
What is the labour rate variance for the month

A)£11,160 F
B)£13,320 U
C)£11,160 U
D)£2,430 F

Quizplus · Accepted Answer

The labour rate variance is calculated as the difference between the actual cost of labour and the standard cost of labour for the actual hours worked. The standard cost for the actual hours worked is 8,100 hours * £15.10/hour = £122,310. The actual labour cost is £119,880. Therefore, the labour rate variance is £122,310 - £119,880 = £2,430 Favourable, as the actual cost is less than the standard cost.

The Following Labour Standards Have Been Established for a Particular