Albert Enterprises recently used 20,000 labor hours to produce 8,300 completed u

Question

Albert Enterprises recently used 20,000 labor hours to produce 8,300 completed units. According to manufacturing specifications, each unit is anticipated to take 2.5 hours to complete. The company's actual payroll cost amounted to $370,000. If the standard labor cost per hour is $18, Holland's labor rate variance is:

$10,375 Unfavorable

$10,000 Unfavorable

$10,000 Favorable

$4,150 Unfavorable

$10,375 Favorable

$10,375 Unfavorable

$10,000 Unfavorable

$10,000 Favorable

$4,150 Unfavorable

$10,375 Favorable

Explanation / Answer

SOLUTION

Labor Rate Variance = $10,000 Unfavorable

Labor Rate Variance = (Actual Hours * Actual Rate) - (Actual Hours * Standard rate)

= $370,000 - (20,000 hours * $18)

= $370,000 - $360,000

= $10,000 (U)

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