g Carnival Enterprises produced 8,000 completed units of a product. According to manufacturing specifications, standard hours for each unit is equal to 2 hours. The company's actual total labor cost amounted to $200,600 for 17000 direct labors actually used. If the standard labor cost per hour is $12, Carnival's labor rate variance is:

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Business

Mattie Haynes

12 September, 05:29

g Carnival Enterprises produced 8,000 completed units of a product. According to manufacturing specifications, standard hours for each unit is equal to 2 hours. The company's actual total labor cost amounted to $200,600 for 17000 direct labors actually used. If the standard labor cost per hour is $12, Carnival's labor rate variance is:

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Ally Kemp · Answer 1

Direct labor rate variance = $3,400 favorable

Explanation:

Giving the following information:

The company's actual total labor cost amounted to $200,600 for 17000 direct labor hours used. The standard labor cost per hour is $12.

To calculate the direct labor rate balance, we need to use the standard rate, actual rate, and actual quantity. We need to calculate the actual rate first.

Actual rate = 200,600/17,000 = $11.8 per hour

Now, we can calculate the direct labor rate variance:

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

Direct labor rate variance = (12 - 11.8) * 17,000 = $3,400 favorable

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