Mountain View Company produces hiking boots. The direct labor standard for each pair of boots is 1 hour at a cost of $ 19.00 per direct labor hour. During the month of May, Mountain View Company used 3 comma 000 direct labor hours to produce 2 comma 300 pairs of boots. Total direct labor cost for May was $ 54 comma 000. What is the labor rate variance for May?

Question

Olive Campos

Business

17 April, 04:03

Mountain View Company produces hiking boots. The direct labor standard for each pair of boots is 1 hour at a cost of $ 19.00 per direct labor hour. During the month of May, Mountain View Company used 3 comma 000 direct labor hours to produce 2 comma 300 pairs of boots. Total direct labor cost for May was $ 54 comma 000. What is the labor rate variance for May?

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Answers (1)

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Elyse Bennett · Answer 1

Labour rate variance

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

= ($19 - $18) x 3,000 hours

= $3,000 (U)

Actual rate = Actual direct labour cost

Actual direct labour hours worked

Actual rate = $54,000

3,000 hours

Actual rate = $18 per direct labour hour

Explanation:

Labour rate variance is the difference between standard rate and actual rate multiplied by actual direct labour hours worked. Actual direct labour hours worked is calculated as actual direct labour cost divided by actual direct labour hours worked.