Calculate the labor rate variance

Labor Rate Variance
• Bruce incurred actual direct labor costs of $14,040 in March.
• Standard hourly Labor rate $13
• The standard labor cost allowed for manufacturing 600 beams is only $11,700 (600 units × 1.5 hours per unit × $13 per hour).
• Thus, the company is faced with an unfavorable labor variance of $2,340 ($11,700 − $14,040).
• Timecards show that 2,075 Actual direct labor hours were used in March.
• The average wage rate for the month was $14per hour. (Actual rate = $14)

7. Calculate the labor rate variance
   Labor Rate Variance = Actual direct Labor Hours × (Standard hourly labor Rate – Actual Rate)