Vilneuve and Prewitt Limited's direct labour budget for May 20X9 comprised 2.3 labour hours at a rate of £9.75 per unit.The actual sales and production level for the month was 1850 units.The actual labour rate paid was £9.95 and each unit actually required, on average, an input of 2.6 labour hours. What was the labour rate variance for May 20X9?

Question

Quizplus · Accepted Answer

The labour rate variance is calculated as (Actual Rate - Standard Rate) x Actual Hours Worked. Here, it is (£9.95 - £9.75) x (1850 units x 2.6 hours) = £0.20 x 4810 hours = £962 (A).

Vilneuve and Prewitt Limited's Direct Labour Budget for May 20X9