Question

Carnival Enterprises produced 8,000 completed units of a product. According to manufacturing specifications, standard hours for each unit is equal to 2 hours. The company's actual total labor cost amounted to $200,600 for 17000 direct labors actually used. If the standard labor cost per hour is $12, Carnival's labor rate variance is: A. $2,000F B. $2,000UF C. $3,400F D. $3,400UF

Answer 1

Answer:

C. $3,400 F

Explanation:

The computation of the direct labor rate variance is shown below:

Direct Labor Rate Variance  

= (Standard rate - Actual rate) × Actual hours

= ($12 - $200,600 ÷ 17,000 labor hours) × 17,000 direct labor hours

= ($12 - $11.8) × 17,000 direct labor hours

= $3,400 favorable  

Since standard cost is more than the actual cost which leads to favorable balance