Question

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 |

Answer #1

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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