• 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)