Question

Gilder Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 7.00 grams $14.00 per gram $98.00 Direct labor 0.20 hours $20.00 per hour $ 4.00 Variable overhead 0.20 hours $ 7.00 per hour $ 1.40 The company reported the following results concerning this product in June: Originally budgeted output 4,000 units Actual output 4,080 units Raw materials used in production 25,996 grams Purchases of raw materials 29,496 grams Actual direct labor-hours 710 hours Actual cost of raw materials purchases $398,200 Actual direct labor cost $13,625 Actual variable overhead cost $3,676 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for June is: $603 F $603 U $575 F $575 U

Answer 1

Answer:- The labor rate variance for June is $575 F.

Explanation:-

Labor Rate variance = (Standard rate – Actual rate) * Actual hours

                                      

= ($20.00 per hour. – $19.19 per hour hours)*710 hours    

=$575 Favourable

Actual rate per hour =Actual labor costs/Actual direct labor hours

=$13625/710 hours =$19.19 per hour