Question

Wayland Company has a standard of 5.8 hours of labor per unit, at $11.40 per hour....

Wayland Company has a standard of 5.8 hours of labor per unit, at $11.40 per hour. In producing 720 units, Wayland used 4,200 hours of labor at a total cost of $45,000. What is Wayland's labor price variance?

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Answer #1

Direct labor rate variance = (SR ? AR) × AH

Where,

   SR is the standard direct labor rate = 11.40

   AR is the actual direct labor rate = (45000/4200) = 10.71

   AH are the actual direct labor hours = 4200 hours

Let’s put the values in the formula

Direct labor rate variance = (11.40 – 10.71)* 4200

                                           = 2898 Favorable

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