Marv Company's direct labor costs for manufacturing its only product were as follows for October:
The direct labor rate variance for October was:

Question

Marv Company's direct labor costs for manufacturing its only product were as follows for October: 
The direct labor rate variance for October was:

Quizplus · Accepted Answer

To calculate the direct labor rate variance, we need to compare the actual direct labor rate per hour with the budgeted rate per hour.

Actual direct labor rate per hour = (total direct labor costs) / (total direct labor hours)
= ($230,000 + $150,000) / (10,000 + 5,000)
= $380,000 / 15,000
= $25.33 per hour

Budgeted direct labor rate per hour = budgeted direct labor costs / budgeted direct labor hours
= $10 per hour + $20 per hour
= $30 per hour

Direct labor rate variance = (actual direct labor rate - budgeted direct labor rate) x actual direct labor hours

= ($25.33 - $30) x 15,000
= -$4.67 x 15,000
= $70,050 favorable

Therefore, the best choice is C, $23,000 favorable.

Marv Company's Direct Labor Costs for Manufacturing Its Only Product