Barber Corporation recently used 30,000 labour hours to produce 7,800 completed units. According to manufacturing specifications, each unit is anticipated to take 3.75 hours to complete. The company's actual payroll cost amounted to $565,000. If the standard labour cost per hour is $19.20, Barber's labour rate variance is:

Question

Quizplus · Accepted Answer

The labor rate variance is calculated as (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate). The actual rate is $565,000 / 30,000 hours = $18.83. The variance is (30,000 x $18.83) - (30,000 x $19.20) = $564,900 - $576,000 = $11,000 favorable (F).

Barber Corporation Recently Used 30,000 Labour Hours to Produce 7,800