Question

The following data relate to product no. 338 of Voluntown Company: Direct labor standard: 6 hours...

The following data relate to product no. 338 of Voluntown Company:

Direct labor standard: 6 hours at $15 per hour
Direct labor used in production: 51,000 hours at a cost of $775,200
Manufacturing activity: 8,400 units completed

The direct-labor rate variance is:

Multiple Choice

  • None of the answers is correct.

  • $10,200U.

  • $10,080U.

  • $10,080F.

Cost standards for one unit of product no. C1895:
Direct material 3 pounds at $2.70 per pound $ 8.10
Direct labor 7 hours at $7.70 per hour 53.90
Actual results:
Units produced 5,600 units
Direct material purchased 26,200 pounds at $2.90 $ 75,980
Direct material used 16,500 pounds at $2.90 47,850
Direct labor 40,300 hours at $7.50 302,250



Assume that the company computes variances at the earliest point in time.

The direct-labor rate variance is:

Multiple Choice

  • $8,060U.

  • $7,804F.

  • $7,804F.

  • None of the answers is correct.

  • $8,060F.

Homework Answers

Answer #1

Question - (1)

Answer -

Step - (1) - Information Given -

Direct labor standard = 6 hours at $15 per hour.

Direct labor used in production = 51000 hours at a cost of $775200.

Manufacturing activity =  8400 units completed.

.

Step - (2) - Calculation of Actual rate per hour -

= Production cost / No. of hours

= $775200 / 51000 hours

= $15.2

.

Step - (3) - Calculation of Direct-labor rate variance -

= (Actual hours * Actual rate) - (Actual hours * Standard rate)

= (51000 hours * $15.2) - (51000 hours * $15)

= 51000 hours * $0.20

= $10200U

Hence, Option - (B) is Correct.

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