2. Use the following data to find the direct labor rate variance if the company

ID: 2465229 • Letter: 2

Question

Use the following data to find the direct labor rate variance if the company produced 7,000 units of product during the period.

a.$12,250 unfavorable.

b.$14,700 unfavorable.

c.$14,700 favorable.

d.$12,250 favorable.

e.$26,950 favorable.

The following company information is available. The direct materials quantity variance is:

a. $10,000 unfavorable.

b. $13,200 unfavorable.

c.$9,600 unfavorable.

d.$10,000 favorable.

e.$13,200 favorable.

A flexible budget may be prepared:

a.Before the operating period only.

b.After the operating period only.

c.During the operating period only.

d.At any time in the planning period.

e.Only when the company encounters excessive costs.

Standard: Direct labor (3.2 hrs. per unit @ $7/hr.) $22.40 per unit Actual cost incurred: Direct labor (24,500 hrs. @ $7.50/hr.) $183,750

2.d.$12,250 favorable.

(Actual rate - Standard rate) x Actual hours worked = Labor rate variance

=7.50-7.00)*24,500=$12,250 Favourable

3.c.$9,600 unfavorable.

direct materials quantity variance=(Actual usage in units - Standard usage in units) x Standard cost per unit

=36,000-34,400)*6.00=$9,600 unfavorable

4.e.Only when the company encounters excessive costs.

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