Newbill Enterprises recently used 26,000 labor hours to produce 9,700 completed units. According to manufacturing specifications, each unit is anticipated to take 2.65 hours to complete. The company's actual payroll cost amounted to $504,400. If the standard labor cost per hour is $19.60, Newbill's labor rate variance is:a.) $582U. b.) $5,000F. c.) $582F. d.) $5,200U. e.) $5,200F. f.) None of these.

Question

Nolan Bentley

Business

2 May, 20:33

Newbill Enterprises recently used 26,000 labor hours to produce 9,700 completed units. According to manufacturing specifications, each unit is anticipated to take 2.65 hours to complete. The company's actual payroll cost amounted to $504,400. If the standard labor cost per hour is $19.60, Newbill's labor rate variance is:a.) $582U. b.) $5,000F. c.) $582F. d.) $5,200U. e.) $5,200F. f.) None of these.

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Armani Norris · Answer 1

Newbill's labour rate variance

= (Standard rate - Actual rate) x Actual hours worked

= ($19.60 - $19.40) x 26,000 hours

= $5,200 (F)

Actual rate

= Actual payroll cost

Actual hours worked

= $504,400

26,000 hours

= $19.40

Explanation:

Labour rate variance is the difference between standard rate and actual rate multiplied by actual hours worked. Actual rate is actual payroll cost divided by actual hours worked.