The Ticktock Corporation produces clocks. According to company standards, it should take 2 hours of direct labor to produce a clock. Ticktock's standard labor cost is $10 per hour. During June, Ticktock produced 5,600 stopwatches and used 14,000 hours of direct labor at a total cost of $266,000. What is Ticktock's direct labor rate variance for June?

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facundobuzzetti facundobuzzetti · Answer 1 · 2020-04-22T05:58:04+02:00

Answer:

Direct labor rate variance= $126,000 unfavorable

Explanation:

Giving the following information:

Ticktock's standard labor cost is $10 per hour.

During June, Ticktock used 14,000 hours of direct labor at a total cost of $266,000.

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

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

Actual rate= 266,000/14,000= 19

Direct labor rate variance= (10 - 19)*14,000= $126,000 unfavorable