The following data relate to direct labor costs for August: actual costs for 5,500 hours at $24.00 per hour and standard costs for 5,000 hours at $23.70 per hour. The direct labor rate variance is
A)$1,650 favorable
B)$1,650 unfavorable
C)$1,500 favorable
D)$1,500 unfavorable

Question

The following data relate to direct labor costs for August: actual costs for 5,500 hours at $24.00 per hour and standard costs for 5,000 hours at $23.70 per hour.​ The direct labor rate variance is
A)$1,650 favorable
B)$1,650 unfavorable
C)$1,500 favorable
D)$1,500 unfavorable

Quizplus · Accepted Answer

The direct labor rate variance is calculated as (Actual Rate - Standard Rate) x Actual Hours = (24.00 - 23.70) x 5,500 = $0.30 x 5,500 = $1,650 unfavorable. This is because the actual rate is higher than the standard rate, leading to additional costs.

The Following Data Relate to Direct Labor Costs for August