Question

Flapjack Corporation had 7,736 actual direct labor hours at an actual rate of $12.10 per hour. Original production had been budgeted for 1,100 units, but only 961 units were actually produced. Labor standards were 7.8 hours per completed unit at a standard rate of $13.21 per hour. The direct labor rate variance is:______.

Answer 1

Answer: $8,586.96 Favorable

Explanation:

Direct Labor Rate Variance = Actual Cost - Standard Cost of Actual Hours

Actual cost = Actual direct labor hours * Actual rate

= 7,736 * 12.10

= $93,605.60

Standard cost of actual hours = Actual hours * Standard cost

= 7,736 * 13.21

= $102,192.56

Direct labor rate variance:

= 93,605.60 - 102,192.56

= $8,586.96 Favorable

Favorable because actual cost was less than the budgeted standard cost.