Question

company produces a lightweight backpack that is popular with college student. standard variable to a single backpack are given below:

standard quantity standard price

direct materials: ? 5.4 per yard

direct labor ? ? per DLH

variable MOH ? 2.00 per DLH

manufacturing over head is applied to production on the basisi of direct labor hours. selected information relating to the month's production is given below:

actual number of units produced in march: 810 backpacks

actual direct labor hours 1400 DLHs

the difference between standard and actual cost per backpack produced during march was $0.1 favorable

material used direct labor variable MOH total

total standard cost allowed $17496 $17496 $2592 $37584

actual cost incurred $ 14784 ? $3679 ?

1. direct labor wage rate variance is

A: $302 unfavorable

B: $1544 unfavorable

C: $140 unfavorable

D: $1404 unfavorable

E : none of the above

Answer 1

Ans:c.$140 unfavourable

explanation:

	Standard for actual				Actuals
	hrs	rate	amount		hrs	rate	amount
Direct labor	1296	$    13.50	17496		1400	$    13.60	19040
	(2592/2)
Labor rate variance = Actual hrs (actual rate - std rate)
Labor rate variance =1400*(13.60-13.50)=		$ 140.00	Unfavourble
	Standard cost
	materials	17496
	labor	17496
	overhead	2592
	total standard costs	37584
	no. of backpacks produced	810
	standard cost of a single backpack	46.4
	less:favourable cost variance	-0.1
	actual cost of a single back pack	46.3
	so you have
	actual cost per unit	46.3
	no. Of units	810
	total actual costs	37503
	Less:direct materials	14784
	less:variable overhead	3679
	Actual direct labor costs	19040