Question

Required information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct materials: 5 pounds at $8.00 per pound Direct labor: 2 hours at $14 per hour Variable overhead: 2 hours at $5 per hour Total standard cost per unit $ 40.00 28.00 10.00 $ 78.00 The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production b. Direct laborers worked 55,000 hours at a rate of $15.00 per hour. c. Total variable manufacturing overhead for the month was $280,500. 9. What is the labor rate variance for March? (Indicate the effect of each variance by selecting "F" fo favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.). Input all amounts as positive values.) Laborrate variance

Answer 1

Answer-9)- The labor rate variance for march is =$55000 U.

Explanation:-

Direct Labor rate variance = (Standard rate – Actual rate) * Actual hours worked

= ($14 per hour – $15 per hour)* 55000 hours   

= $55000 Unfavorable