Rax company has developed the following standards for one of its products: Direc

ID: 2372412 • Letter: R

Question

Rax company has developed the following standards for one of its products:

Direct Materials 12 Pounds- $14per pound

Direct labor 3 hours - $18 per hour

Variable overhead 3 hours - $8 per hour

the following activities occurrred during the month of october:

materials purchased 10,000 pounds at $13.60 per pound

Materials used 9,000 pounds

Units produced 800 units

Direct labor $22,000

Rax compan'ys labor rate variance would be

a. $4,300 favorable

b. $2,500 favorable

c. 4,300 unfavorable

d. 2,500 unfavorable

Hi,

Please find the answer as follows:

Labor Rate Variance = Actual Hours*(Actual Rate - Standard Rate) = 2500*(19 - 18) = 2500 (U). Option D is correct.

Thanks.

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