Q. The Carl Care Company established the following direct labour cost standards for one unit of product Z:
•Standard hours: 1.5 hours
•Standard rate: $20 per hour
•Standard cost: $30 (1.5 hours @ $20 per hour)
During the month of July, 20,000 direct labour hours were worked, and 12,500 units of
product Z were manufactured. The total wages related to direct labour in July were
$405,000. The direct labour rate variance for July was:
•Standard hours: 1.5 hours
•Standard rate: $20 per hour
•Standard cost: $30 (1.5 hours @ $20 per hour)
During the month of July, 20,000 direct labour hours were worked, and 12,500 units of
product Z were manufactured. The total wages related to direct labour in July were
$405,000. The direct labour rate variance for July was:
✅ Correct Answer: (A)
$5,000 unfavourable