Hassock Corp. produces woven wall hangings. It takes 2 hours of direct labor to produce a single wall hanging. Hassock's standard labor cost is $14 per hour. During August, Hassock produced 12,000 units and used 24,200 hours of direct labor at a total cost of $335,100. What is Hassock's labor rate variance for August?

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Business

Paco

16 August, 19:14

Hassock Corp. produces woven wall hangings. It takes 2 hours of direct labor to produce a single wall hanging. Hassock's standard labor cost is $14 per hour. During August, Hassock produced 12,000 units and used 24,200 hours of direct labor at a total cost of $335,100. What is Hassock's labor rate variance for August?

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Liana Stokes · Answer 1

Direct labor rate variance = $3,630 favorable

Explanation:

Giving the following information:

Standard production = 2 hours per unit

Standard labor cost = 14 per hour.

During August, Hassock produced 12,000 units and used 24,200 hours of direct labor at a total cost of $335,100.

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

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

Actual rate = 335,100/24,200 = $13.85

Direct labor rate variance = (14 - 13.85) * 24,200 = $3,630 favorable