Epley Corporation makes a product with the following standard costs: Standard Qu
ID: 2434421 • Letter: E
Question
Epley Corporation makes a product with the following standard costs: Standard Quantity or HoursStandard Price or Rate Direct materials Direct labor Varlable overhead 10.0 pounds 0.8 hours 0.8 hours $32.00 per hour $15.00 per hour In July the company produced 3,430 units using 13,720 pounds of the direct material and 2,864 direct labor- hours. During the month, the company purchased 14,480 pounds of the direct material at a cost of $35,100 The actual direct labor cost was $91,236 and the actual vartable overhead cost was $41,188. 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 labor rate varlance for July is: O $412 F O $412 U O $3.428U O $3,428FExplanation / Answer
A. $412 F
Labor rate variance = (AH × AR) ?(AH × SR)
= ($91,236) ? (2,864 hours × $32.00 per hour)
= $412 F
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