Question

Europa Company manufactures only one product. Presented below is direct labor information for November.

Standard direct labor hours per unit of product	3.20
Number of finished units produced	6,500
Standard wage rate per direct labor hour (SP)	$19.20
Total direct labor payroll for the period	$359,424
Actual wage rate per direct labor hour worked (AP)	$16

The direct labor rate variance for November (to two decimal places) was:

Options:

	$71,884.80 favorable.
	$26,624.00 unfavorable.
	$39,936.00 favorable.
	$31,948.80 unfavorable.

Answer 1

Total direct labor payroll = $359,424

Actual wage rate per direct labor hour worked = $16

Actual time = Total direct labor payroll / Actual wage rate per direct labor hour worked

= 359,424/16

= 22,464 hours

Standard rate = $19.20 per direct labor hour

Direct labor rate variance = Actual time x ( Standard rate-Actual rate)

= 22,464 x ( 19.20-16)

= $71,884.80 ( favorable)

First option is the correct option.

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Thanks