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Commercial Pilot Licence (CPAER) – Canada · Question

A company manufactured 1,000 units but had budgeted to manufacture 1,100 units. Actual direct labour hours were 2,100, while standard hours per unit were 2.0. Actual rate was $28/hour, standard rate was $27/hour. Calculate the direct labour rate variance.

Direct labour rate variance = (Actual Rate - Standard Rate) x Actual Hours. = ($28 - $27) x 2,100 = $1 x 2,100 = $2,100 Unfavourable.

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Question: A company manufactured 1,000 units but had budgeted to manufacture 1,100 units. Actual direct labour hours were 2,100, while standard hours per unit were 2.0. Actual rate was $28/hour, standard rate was $27/hour. Calculate the direct labour rate variance.

Answer options: ✅ $(2,100) unfavourable.

  • $(2,000) unfavourable.
  • $2,100 favourable.
  • $ $(2,200) unfavourable.

Correct answer: $(2,100) unfavourable.

Explanation: Direct labour rate variance = (Actual Rate - Standard Rate) x Actual Hours. = ($28 - $27) x 2,100 = $1 x 2,100 = $2,100 Unfavourable.

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