Answer :
Answer:
To calculate the labor rate variance, we need to compare the actual labor cost to the standard labor cost based on the actual hours worked. The formula for the labor rate variance is:
\[ \text{Labor Rate Variance (LRV)} = (\text{Actual Hourly Rate} - \text{Standard Hourly Rate}) \times \text{Actual Hours Worked} \]
Here's how we calculate each component:
1. **Standard Hourly Rate**: $8.75 (given)
2. **Actual Hours Worked**: 2,680 hours (given)
3. **Actual Cost of Labor**: $46,632 (given)
First, calculate the actual hourly rate:
\[ \text{Actual Hourly Rate} = \frac{\text{Actual Cost of Labor}}{\text{Actual Hours Worked}} = \frac{46,632}{2,680} = 17.40 \]
Next, compute the labor rate variance:
\[ \text{Labor Rate Variance (LRV)} = (\text{Actual Hourly Rate} - \text{Standard Hourly Rate}) \times \text{Actual Hours Worked} \]
Substitute the values into the formula:
\[ \text{LRV} = (17.40 - 8.75) \times 2,680 \]
\[ \text{LRV} = 8.65 \times 2,680 \]
\[ \text{LRV} = 23,182 \]
Therefore, the labor rate variance for OWCC for the month of March is **$23,182** unfavorable. This is because the actual hourly rate is higher than the standard hourly rate, resulting in higher labor costs.