Ans. A 1 | Labor rate variance = (Standard rate - Actual rate) * Actual hours | ||
($14.10 - $13.90) * 2,790 | |||
$0.20 * 2,790 | |||
$558 | favorable | ||
Labor time variance = (Standard hours - Actual hours) * Standard rate | |||
(2,750 - 2,790) * $14.10 | |||
-40 * $14.10 | |||
-$564 | or $564 unfavorable | ||
Total direct labor cost variance = Labor rate variance + Labor time variance | |||
$558 + (-$564) | |||
-$6 | or $6 unfavorable | ||
Ans. B | The employees may have been less-experienced or poorly trained, thereby resulting in a | ||
lower labor rate than planned. The lower level of experience or training may have resulted | |||
in less efficient performance. Thus, the actual time required was more than standard. | |||
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