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4 May, 12:02

The Fellowes Company has developed standards for direct labor. During June, 75 units were scheduled and 100 were produced. Data related to direct labor are "Standard hours allowed 2 hours per unit Standard wages allowed $ 5.00 per hour Actual direct labor 240 hours (total cost $1,176) What is the labor rate variance for June?$21 unfavorable.$24 favorable.$24 unfavorable.$21 favorable.

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  1. 4 May, 14:34
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    The correct answer is B.

    Explanation:

    Giving the following information:

    Standard hours per unit = 2 hours

    Standard labor hour rate = $5 per hour

    Units produced = 100 units

    The actual number of hours = 240 hours

    Total labor cost = $1,176

    To determine the direct labor rate variance, we need to use the following formula:

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

    Standard rate = $5

    Actual rate = 1,176/240 = $4.9

    Actual quantity = 240 hours

    Direct labor rate variance = (5 - 4.9) * 240 = $24 favorable

    It is favorable because the actual rate was lower than estimated.
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