Question Content AreaThe following data relate to direct labor costs for the current period:Line Item DescriptionValueStandard costs 7,000 hours at $11.80Actual costs 6,300 hours at $10.80The direct labor rate variance isa. $14,560 unfavorableb. $6,300 favorablec. $14,560 favorabled. $8,260 favorable

The objective of the question is to calculate the direct labor rate variance. The labor rate…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following data relate to direct labor costs for the current period:

Line Item Description Value

Standard costs 7,000 hours at $11.80

Actual costs 6,300 hours at $10.80

The direct labor rate variance is

a. $14,560 unfavorable

b. $6,300 favorable

c. $14,560 favorable

d. $8,260 favorable

Line Item Description	Value
Standard costs	7,000 hours at $11.80
Actual costs	6,300 hours at $10.80

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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