If actual direct labor cost was $7,560 and standard labor cost was $7,000,the journal entry to record this would include:
A)A credit to the labor rate variance account of $560 and a credit to Direct Labor of $7,000.
B)A debit to the labor rate variance account of $560 and a debit to Direct Labor of $7,000.
C)A credit to the labor rate variance account of $560 and a debit to Direct Labor of $7,560.
D)A debit to the labor rate variance account of $560 and a credit to Direct Labor of $7,560.

Question

Quizplus · Accepted Answer

The difference between actual direct labor cost and standard labor cost is the labor rate variance. In this case, the actual direct labor cost is higher than the standard labor cost, which means there is an unfavorable labor rate variance of $560 ($7,560 actual cost minus $7,000 standard cost). The labor rate variance account should be debited for this amount to reflect the unfavorable variance. Meanwhile, Direct Labor should be credited for the actual cost incurred, which is $7,560. Therefore, the correct journal entry would be a debit to labor rate variance account for $560 and a credit to Direct Labor for $7,560. Option D is the only one that matches this journal entry.

If Actual Direct Labor Cost Was $7,560 and Standard Labor