Question

XYZ Company makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 6.5 ounces $ 2.00 per ounce $ 13.00 Direct labor 0.2 hours $ 23.00 per hour $ 4.60 Variable overhead 0.2 hours $ 6.00 per hour $ 1.20 The company reported the following results concerning this product in June. Originally budgeted output 2,700 units Actual output 2,800 units Raw materials used in production 19,380 ounces Purchases of raw materials 21,400 ounces Actual direct labor-hours 500 hours Actual cost of raw materials purchases $ 40,660 Actual direct labor cost $ 12,116 Actual variable overhead cost $ 3,100 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 direct labor rate variance for June is: Multiple Choice $616 F $616 U $550 F $550 U

Answer 1

Answer:

labour rate variance   = $616 unfavorable

Explanation:

The rate variance would be the difference between the standard labour cost of the 500 actual hours worked   and the actual labour cost.

This derived below:

                                                                             $

Standard labor cost ($23 per × 500)  =        11500

Actual labour cost                                            (12,116)

labour rate variance                                     $616 unfavorable