Using the labor time standard of 0.5 labor hour per unit and a labor cost standard of $10 per labor hour for a 10 pound bag of chocolate and the following actual cost and usage data, compute the direct labor rate variance. $\begin{array}{ll}
\text { Direct labor hours used } & 4,950 \text { hours } \
\text { Total cost of direct labor } & \$ 53,460 \
\text { Number of good units prochuced } & 9,000 \text { units }
\end{array}$

Question

Quizplus · Accepted Answer

The direct labor rate variance is calculated as the difference between the actual cost of labor and the standard cost of labor for the actual hours worked. The standard cost of labor for the actual hours worked is calculated as the standard labor cost per hour multiplied by the actual hours worked. In this case, the standard cost is $10 per labor hour, and the actual hours worked are 4,950 hours. Therefore, the standard cost of labor for the actual hours worked is $4,950 \text{ hours} \times \$10/\text{hour} = \$49,500$. The actual cost of labor is given as $53,460. The direct labor rate variance is $ \$53,460 - \$49,500 = \$3,960$. Since the actual cost is higher than the standard cost, the variance is unfavorable (U).

Using the Labor Time Standard of 0 A) $4,500 (U) B) $4,500 (F) C) $3,960 (F) D)

Using the Labor Time Standard of 0 A) $4,500 (U)
B) $4,500 (F)
C) $3,960 (F)
D)