The Fellowes Company has developed standards for direct labor. During June, 75 units were scheduled and 100 were produced. Data related to direct labor are "Standard hours allowed 2 hours per unit Standard wages allowed $ 5.00 per hour Actual direct labor 240 hours (total cost $1,176) What is the labor rate variance for June?$21 unfavorable.$24 favorable.$24 unfavorable.$21 favorable.

The correct answer is B.

Explanation:

Giving the following information:

Standard hours per unit = 2 hours

Standard labor hour rate = $5 per hour

Units produced = 100 units

The actual number of hours = 240 hours

Total labor cost = $1,176

To determine the direct labor rate variance, we need to use the following formula:

Direct labor rate variance = (Standard Rate - Actual Rate) * Actual Quantity

Standard rate = $5

Actual rate = 1,176/240 = $4.9

Actual quantity = 240 hours

Direct labor rate variance = (5 - 4.9) * 240 = $24 favorable

It is favorable because the actual rate was lower than estimated.