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?
A) $2,000 favorable.
B) $2,104 unfavorable.
C) $2,104 favorable.
D) $4,160 favorable.
E) $2,000 unfavorablE.

Question

Quizplus · Accepted Answer

First, calculate the standard cost for direct labor:
Standard cost = 2 hours x $12 per hour = $24 per unit

Next, calculate the actual cost for direct labor:
Actual cost = $250,376 / 10,000 units = $25.04 per unit

Then, calculate the labor rate variance:
Labor rate variance = (Actual labor rate - Standard labor rate) x Actual hours 
Labor rate variance = ($25.04 - $24) x 21,040 hours 
Labor rate variance = $24,040.8

Since the labor rate variance is positive, it is favorable. Therefore, the answer is C, $2,104 favorable.