Question

Dirickson Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours Hours per Unit of Direct materials Direct labor Variable manufacturing overhead 7.6 ounces 0.10 hours 8.18 hours 9.48 per ounce $18.00 per hour %5.30 per hour The company has reported the following actual results for the product for July Actual output Raw materials purchased Actual cost of raw materials purchased Raw materials used in production Actual direct labor-hours Actual direct labor cost Actual variable overhead cost 7,600 units 63,000 ounces 541,800 57,750 ounces 820 hours s 16,072 s 4,592 The labor rate variance for the month is closest to Multiple Choice

Answer 1

Solution:

Labour rate variance = (AH x AR) - (AH x SR)

= (820 x $19.60) - (820 x $18)

= $1,312