Mountain View Company produces hiking boots. The direct labor standard for each pair of boots is 1 hour at a cost of $20 per direct labor hour. During the month of May, Mountain View Company used 2200 direct labor hours to produce 2100 pairs of boots. Total direct labor cost for May was $39,600. What is the labor rate variance for May?
A)$4400 favorable
B)$4400 unfavorable
C)$4200 favorable
D)$4200 unfavorable

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 $39,600 / 2200 hours = $18/hour. The standard rate is $20/hour. The variance is 2200 x ($18 - $20) = $4400 favorable.

Mountain View Company Produces Hiking Boots