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Managerial Accounting

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Moderate

Labor Rate Variance for Engines

MGRACT-G5NGYF

Hyatt Corp manufactures aircraft engines for sales to major airlines. The standard number of hours required to build a standard lot of engines is 5,000 hours. The standard wage rate is \$38.50 per hour. The actual hours incurred were 4,910. Actual labor wages incurred \$202,537.50.

What is the labor rate variance?

A

10,037.50 Unfavorable

B

$3,465 Favorable

C

$13,502.50 Unfavorable

D

$10,037.50 Favorable