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9 March, 15:07

Zanny Electronics Corporation uses a standard cost system for the production of its water ski radios. The direct labor standard for each radio is 0.9 hours. The standard direct labor cost per hour is $7.20. During the month of August, Zanny's water ski radio production used 6,600 direct labor-hours at a total direct labor cost of $48,708. This resulted in production of 6,900 water ski radios for August. What is Zanny's labor rate variance for August? Multiple Choice $1,188 Unfavorable $972 Favorable $2,808 Unfavorable $2,160 Favorable

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  1. 9 March, 18:51
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    Direct labor rate variance = $1,188 unfavorable

    Explanation:

    Giving the following information:

    Standard labor rate = $7.20 per hour

    Actual hours worked = 6,600 hours

    Actual total labor cost = $48,708

    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 = 48,708/6,600 = $7.38 per hour

    Direct labor rate variance = (7.2 - 7.38) * 6,600

    Direct labor rate variance = $1,188 unfavorable
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