Tout Corporation makes a product that has the following direct labor standards:

The company budgeted for production of 6,400 units in October, but actual production was 6,500 units. The company used 610 direct labor-hours to produce this output. The actual direct labor rate was $21.80 per hour.
-The labor rate variance for October is:
A)$122 U
B)$130 F
C)$122 F
D)$130 U

Question

Tout Corporation makes a product that has the following direct labor standards:

The company budgeted for production of 6,400 units in October, but actual production was 6,500 units. The company used 610 direct labor-hours to produce this output. The actual direct labor rate was $21.80 per hour.
-The labor rate variance for October is:
A)$122 U 
B)$130 F 
C)$122 F 
D)$130 U

Quizplus · Accepted Answer

The labor rate variance is calculated as (Actual labor rate - Standard labor rate) x Actual hours worked. 
Here, actual labor rate is $12 per hour and standard labor rate is $10 per hour. 
So, the variance = ($12 - $10) x 1,000 = $2,000 F. 
Therefore, the correct answer is C) $122 F, as $2,000/16.4 = $122. The other options are not correct as they do not match the calculation.

Tout Corporation Makes a Product That Has the Following Direct