Use the following information to answer the next two questions. At the beginning of the current financial year, the BeachShack Hotel established the standard that it should take 45 minutes to process 1 container of laundry. The Hotel also budgeted that laundry labour should be paid $18 per hour.
At the end of May, the laundry department's performance report indicated that 160 hours had been worked in processing 200 containers of laundry. Laundry staff wages for May were $3,200.
-What is the Beach Shack hotel's laundry labour rate variance for May?

Question

Use the following information to answer the next two questions. At the beginning of the current financial year, the BeachShack Hotel established the standard that it should take 45 minutes to process 1 container of laundry. The Hotel also budgeted that laundry labour should be paid $18 per hour. 
At the end of May, the laundry department's performance report indicated that 160 hours had been worked in processing 200 containers of laundry. Laundry staff wages for May were $3,200.
-What is the Beach Shack hotel's laundry labour rate variance for May?

Quizplus · Accepted Answer

The labour rate variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. The standard rate is $18 per hour. The actual rate is $3,200 / 160 hours = $20 per hour. Therefore, the variance is ($20 - $18) x 160 hours = $2 x 160 hours = $320 (unfavourable), because the actual rate is higher than the standard rate.

Use the Following Information to Answer the Next Two Questions