Question

# Sunland Products embosses notebooks with school and corporate logos. Last year, the company’s direct labor payroll...

Sunland Products embosses notebooks with school and corporate logos. Last year, the company’s direct labor payroll totaled \$314,433 for 49,910 direct labor hours. The standard wage rate is \$6.00 per direct labor hour.

Calculate Sunland’s direct labor rate variance. (Round answer to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

 Direct labor rate variance \$Enter direct labor rate variance in dollars rounded to 0 decimal places Select an option                                                          Not ApplicableFavorableUnfavorable

Actual time used = 49,910 hours

Actual cost of labor used = \$314,433

Hence, actual rate = Actual cost of labor used/Actual time used
= 314,433/49,910
= \$6.3 per direct labor hour

Standard rate = \$6 per direct labor hour

Direct labor rate variance = Actual time x (Standard rate - Actual rate)
= 49,910 x (6 – 6.3)
= \$14,973 (Unfavorable)

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