Bartels Corp. produces woodcarvings. It takes 2 hours of direct labor to produce a carving. Bartels' standard labor cost is $12 per hour. During August, Bartels produced 10,000 carvings and used 21,040 hours of direct labor at a total cost of $250,376. What is Bartels' labor rate variance for August?

Question

Quizplus · Accepted Answer

The labor rate variance formula is (Actual hours worked x Actual labor rate) - (Actual hours worked x Standard labor rate). 
Actual hours worked = 21,040
Actual labor rate = $250,376 / 21,040 = $11.90 per hour
Standard labor rate = $12 per hour
So the labor rate variance is: 
(21,040 x $11.90) - (21,040 x $12) = $250,216 - $252,480 = $2,264 favorable. 
Therefore, the closest choice is C, which is $2,104 favorable.