Hassock Corp.produces woven wall hangings.It takes 2 hours of direct labor to produce a single wall hanging.Hassock's standard labor cost is $12 per hour.During August,Hassock produced 10,000 units and used 21,040 hours of direct labor at a total cost of $250,376.What is Hassock's labor rate variance for August?

Question

Quizplus · Accepted Answer

The labor rate variance formula is:

(Labor Rate Actual - Labor Rate Standard) x Actual Hours

Labor Rate Actual = Total Labor Cost / Actual Hours
Labor Rate Actual = $250,376 / 21,040 hours
Labor Rate Actual = $11.89 per hour

Labor Rate Variance = ($11.89 - $12) x 21,040 hours
Labor Rate Variance = (-$0.11) x 21,040 hours
Labor Rate Variance = -$2,314.40

Therefore, the labor rate variance for August is $2,314.40 unfavorable, which is closest to answer choice C ($2,104 favorable).