The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month:
What is the labor rate variance for the month?
A) $450 Favorable
B) $3,915 Favorable
C) $3,915 Unfavorable
D) $450 Unfavorable

Question

The following labor standards have been established for a particular product:  The following data pertain to operations concerning the product for the last month:
 What is the labor rate variance for the month?
A) $450 Favorable 
B) $3,915 Favorable 
C) $3,915 Unfavorable 
D) $450 Unfavorable

Quizplus · Accepted Answer

To calculate the labor rate variance, we need to compare the actual rate paid per hour of labor with the standard rate per hour of labor. 
Actual rate paid per hour = Total labor cost for the month / Total hours of labor for the month
= ($21,450 + $2,850) / (2,100 + 300)
= $24 / hour
Standard rate per hour = $22 / hour (given in the labor standards)
So, labor rate variance = (Actual rate - Standard rate) x Actual hours
= ($24 - $22) x 2,100
= $4,200 unfavorable
Therefore, the correct answer is C, $3,915 Unfavorable (rounded to the nearest dollar).

The Following Labor Standards Have Been Established for a Particular