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

Bartels' labor rate variance for August can be calculated using the formula: 
Labor rate variance = (Actual labor rate - Standard labor rate) x Actual hours worked

The actual labor rate is the total cost of direct labor divided by the actual hours worked:

Actual labor rate = $250,376 / 21,040 hours = $11.90 per hour

The standard labor rate is $12 per hour, as given in the problem.

Plugging in the numbers:

Labor rate variance = ($11.90 - $12) x 21,040 hours 
Labor rate variance = (-$0.10) x 21,040 hours 
Labor rate variance = -$2,104

Therefore, the labor rate variance for August is $2,104 favorable, as the actual labor rate is slightly lower than the standard labor rate.