Compute the direct labor rate variance given actual cost $374,400 for 36,000 hours and a standard rate of $10 per hour.

Compute the direct labor rate variance given actual cost $374,400 for 36,000 hours and a standard rate of $10 per hour.

• A. $4,000 U
• B. $0
• C. $14,400 U
• D. $6,000 F

Answer: (C)

Direct labor rate variance shows whether you paid more or less per hour than planned for the hours worked. Here, actual cost is 374,400 for 36,000 hours, so the actual rate is 374,400 ÷ 36,000 = 10.40 per hour. The standard rate is 10.00 per hour, so the difference is 0.40 per hour unfavorable. Multiply by the actual hours: 0.40 × 36,000 = 14,400 unfavorable. So, the direct labor rate variance is 14,400 U.

Direct labor rate variance shows whether you paid more or less per hour than planned for the hours worked. Here, actual cost is 374,400 for 36,000 hours, so the actual rate is 374,400 ÷ 36,000 = 10.40 per hour. The standard rate is 10.00 per hour, so the difference is 0.40 per hour unfavorable. Multiply by the actual hours: 0.40 × 36,000 = 14,400 unfavorable. So, the direct labor rate variance is 14,400 U.