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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