Question

MC Qu. 84 Use the following data to find... Use the following data to find the total direct labor cost variance if the company produced 3,500 units during the period. Direct labor standard (4.00 hrs. @ $7.10/hr.) $ 28.40 per unit Actual hours worked 12,350 Actual rate per hour $ 7.70 Multiple Choice $8,400 favorable. $8,400 unfavorable. $4,305 unfavorable. $4,305 favorable. $12,350 favorable.

Answer 1

The direct labor efficiency variance= Standard Rate * ( Actual Hours - Standard Hours)

= $ 7.10 * [ 12,350 - ( 4 Hours * 3,500)]

= $ =11,715

Since the Actual Hours is less than the Standard Hours , the Variance is favorable

Hence the correct answer is $ 11,715 favorable

The  labor rate variance = Actual Hours * ( Actual rate - Standard Rate)

= 12,350 Hours * ( $ 7.70- $ 7.10)

= $ 7,410

Since the Actual Rate is more than the Standard Rate, the Variance is Unfavorable

Hence the correct answer is $7,410 Unfavorable

The total direct labor cost variance= $ 11,715 favorable - $7,410 Unfavorable

= 4,305 Favorable

Hence the correct answer is $4,305 favorable