Pochard Paints manufactures artist's oil paints. Each 40 ml tube of paint requires 5 minutes of direct labor, and the standard labor rate is $9 per direct labor hour. In September, Pochard incurred 10,800 direct labor hours at a cost of $95,000 to produce 120,000 tubes of paint. Calculate Pochard's direct labor rate variance for September.

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Business

Keshawn Estrada

2 May, 12:23

Pochard Paints manufactures artist's oil paints. Each 40 ml tube of paint requires 5 minutes of direct labor, and the standard labor rate is $9 per direct labor hour. In September, Pochard incurred 10,800 direct labor hours at a cost of $95,000 to produce 120,000 tubes of paint. Calculate Pochard's direct labor rate variance for September.

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Wolfe · Answer 1

Direct labor rate variance = $2,160 favorable

Explanation:

Giving the following information:

Each 40 ml tube of paint requires 5 minutes of direct labor, and the standard labor rate is $9 per direct labor hour. In September, Pochard incurred 10,800 direct labor hours for $95,000 to produce 120,000 tubes of paint.

To calculate the Direct Labor rate variance we need to use the following formula:

Direct labor rate variance = (Standard Rate - Actual Rate) * Actual Quantity

SR = 9

AR = ($95,000/10,800) = $8.80

AQ = 10,800

Direct labor rate variance = (9 - 8.8) * 10,800 = 2,160 favorable