Question

A company uses the following standard costs to produce a single unit of output. Direct materials...

A company uses the following standard costs to produce a single unit of output.

Direct materials 8 pounds at $1.10 per pound = $ 8.80
Direct labor 0.50 hour at $8.00 per hour = $ 4.00
Manufacturing overhead 0.50 hour at $4.30 per hour = $ 2.15



During the latest month, the company purchased and used 76,000 pounds of direct materials at a price of $1.2 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $37,268 based on 4,840 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $18,500 and fixed manufacturing overhead incurred was $10,000. Based on this information, the direct labor rate variance for the month was:

Multiple Choice

$1,280 favorable

$2,732 favorable

$1,452 favorable

$2,732 unfavorable

$1,280 unfavorable

Homework Answers

Answer #1

$1,452 favorable

Working:

Direct Labor rate variance = (Standard labor rate-Actual labor rate)*Actual Labor hours
= (8.00-7.70)*4840
= $         1,452 Favorable
Working:
Standard Labor rate = $            8.00 per hour
Actual Labor rate = $       37,268 / 4840 = $       7.70
Actual Labor hours = 4840 hours
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